Minister of Finance Mohamed Moeit announced keeping the customs foreign exchange rate at EGP 16 against the dollar starting from August 2018 for one month.
The Ministry of Finance decided on 1 July 2018 to keep the customs dollar unchanged at EGP 16 till the end of the month.
According to Moeit, the customs dollar rate is around 90% of the dollar market.
Figures from the Central Bank of Egypt (CBE) estimated the dollar at EGP 17.82 for buying and EGP 17.95 to sell.
In the beginning of 2018, the rate was EGP 17.65 to buy and EGP 17.78 to sell. During the past seven months, the rate fluctuated up and down.
The rate reached its seven-month low on 11 March 2018 at EGP 17.549 to buy and EGP 17.679 to sell, while it peaked on 16 May 2018 at EGP 17.86 to buy and EGP 17.97 to sell.
Capital Economics had projected that the dollar rate will reach EGP 19 by the end of the year and EGP 20 by the end of 2020.
In a recent report, the foundation said that as the external situation of Egypt improves, the pound is expected to fall moderately against the USD.
The report indicated that the pound fell moderately against the USD as the balance of payment improved spanning the past 18 months, which improves the situation of local currency.
The data of balance of payments issued recently showed the current account has declined to 3.3% of the GDP in the first quarter this year, against 3.9% in the fourth quarter last year, according to Capital Economics.
She added that the narrowing of the current account deficit was the result of the increase in non-oil exports with the weakness of the value of the pound for external competition, as well as weak growth of imports.
For his part, Tarek Metwally, deputy managing director of BLOM – Egypt Bank, and an expert on exchange markets, refuted the outlook for Capital Economics, saying the report was highly inaccurate.
Metwally wondered how the foundation expects the exchange rate to increase when the balance of payment situation shows improvement. “This is in the interest of the Egyptian pound and supports its value against the dollar, not the other way around,” he added.
He expected the exchange rate to move between EGP 17 and EGP 17.5 in the coming period as the hard cash resources recover.
Metwally ruled out that the exit of foreigners from the investment market in government debt instruments will affect the dollar against the pound, stressing that the good management of the CBE will work around this impact.