The drop in the FX rate is accelerating, Ihab Farouk writes for Reuters’ Arabic service. Demand for USD has been increasing given the anticipated Fed rate hike as well as seasonal demand in preparation for Ramadan. Beltone Financial’s Hany Genena says all currencies are losing ground to the USD in anticipation of the rate increase and what is happening now shows that the central bank is not intervening directly in the market. There is an uptick in clients’ activities to withdraw USD from their accounts, bankers told Reuters.

… In the market between banks, however, there was a lack of activity: The interbank market has stagnated this month “after the flurry of activity in February caused by an influx of foreign inflows died down,” Asma Alsharif writes for Reuters. "There was a snowball effect which started after the sale of the Eurobonds … The funds came in and the [USD] price started declining and people started to panic and sell their [USD]," one banker said, and this drove the price of USD down. “The market is fragile and not very deep so if [USD 200-300 mn] enters the market at once they can make a difference,” the banker explains “foreign investors did not leave but no new inflows came in either and the market stopped for a bit at that level … In the third week of Feb things started slowing down. Currently there is no supply and the interbank market is stagnant.” Banks will need to raise their USD rates in order to attract more liquidity into the banking system again, another banker noted.