Egyptian pound appreciates to highest in over two years
By Yousef Saba
CAIRO, March 17 (Reuters) - The Egyptian pound strengthened
on Sunday to its highest in over two years, boosted by an
increase in foreign funds into the country.
The currency was trading at 17.34 to the dollar on Sunday,
up more than three percent from 17.86 on Jan. 22 when it began
its latest round of strengthening.
"You're seeing most of the indicators improving," said Hany
Farahat, senior economist at Egyptian investment bank CI
Capital. "Tourism, exports, substitution of natural gas imports
with domestic production, remittances are at a peak, FDI is
He also said the higher inflows were due in large part to
Egypt scrapping a mechanism that guaranteed foreign currency for
investors exiting the government securities market.
"Once the repatriation mechanism was abolished, it meant
that every single inflow coming into the country reflects
directly on interbank liquidity," he said. "This, in tandem,
should also reflect directly on EGP volatility against the
"I think it has come a bit late. If the repatriation
mechanism had been removed a year ago, this appreciation would
have happened a year ago," he said.
Since the central bank devalued the currency by about half
in 2016, economists say it has closely controlled the value of
the pound, which was last this strong in March 2017.
Allen Sandeep, head of research at Naeem Brokerage, said the
higher inflows were also due to increased carry trade appetite
for Egyptian treasury securities and improving balance of
"We have now restarted LNG exports," Sandeep said. "On an
annual basis, assuming that we export 1 billion cubic feet (bcf)
of gas every day, that adds more than $2 billion in exports per
Egypt, which now exports 1.1 bcf of natural gas per day,
became a net exporter in late 2018, a significant turnaround for
a country that spent about $3 billion on annual LNG imports as
recently as 2016.
(Reporting by Yousef Saba; Editing by Patrick Werr, William
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