Dollars flow into Egypt currency market after depreciation

Hundreds of millions of dollars have flowed through Egypt’s interbank market since the central bank allowed the Egyptian pound to depreciate by 13 per cent to a historic low, bankers said on Thursday.

The Egyptian pound weakened to as low as 32.20 to the dollar on Wednesday from 27.60 at the open of trade. It has since rebounded to 30.55 at midday on Thursday.

One banker said that more than $800 million traded in the interbank market on Wednesday, an amount confirmed by a second banker. So far on Thursday at least $160 million had traded.

Bankers said there were signs of international institutions pouring money into Egypt ahead of Thursday’s auction of local treasury bills. Such investors had been largely absent since March.

Egypt has been suffering a shortage of foreign currency since the war in Ukraine hit tourism revenue, raised commodity import bills and led foreign investors to pull more than $20 billion out of the economy. The pound has lost about 51 per cent of its value since March.

The state MENA news agency quoted a banker as saying dollar inflows on the interbank market jumped to between $650 million and $750 million on Wednesday after they had been trading at $150 million on average.

More than $250 million flowed into the market from international institutions on Wednesday, MENA said.