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The EGP rebounded against the USD yesterday, offsetting some of the losses it had incurred during Sunday’s trading, as panic among foreign investors subsided, a source in the banking sector told EnterpriseAM. Markets were less reactive despite continued Israel-Iran escalations overnight, the source added. 35/34
The USD exchange rate recorded EGP 50.20-50.21 for buying and EGP 50.31-50.34 for selling at state and private banks, down by around EGP 0.35 since the day before, following a halt in exits and purchases from Arab and Egyptian institutions, which helped restore confidence among foreign investors. According to the source, interbank USD transactions subsided to below USD 500 mn yesterday, compared to USD 800 mn on Sunday.
“We are still in a phase of uncertainty, but it seems the markets are becoming less affected by the repercussions — that is unless the escalation intensifies, in which case the impact will return,” the source said. High interest rates on debt instruments could contribute to keeping hot money in the market for a longer period, the source added.
REMEMBER- Sunday marked the first day of trading since Israel and Iran started trading attacks, which led to the USD crossing the EGP 51 mark for the first time since April during trading, before being sold for around EGP 50.66-50.69 at state-owned and private banks by the end of trading. The dip was the result of foreign investors exiting our local debt market in favor of safer havens, three sources in the banking sector told EnterpriseAM.
The EGP’s appreciation against the USD was also down to the limited selling activity in the secondary market compared to Sunday, in what is an indication that foreign investors are continuing to hold positions in the local market.
Egypt is also facing pre-closing commitments for the FY 2024-2025 state budget, with the Finance Ministry set to close its accounts on 18 June. No further allocations will be disbursed between government entities in preparation for the start of the new fiscal year on 1 July.
