EGP hits two-year high against the USD
EGP hits two-year high against the USD: The EGP is continuing its seven-week rally against the greenback, hitting a two-year high of EGP 17.35 : USD 1 yesterday. The EGP was at 17.92 on 27 January. “You’re seeing most of the indicators improving,” Hany Farahat, senior economist at CI Capital, told Reuters. “Tourism, exports, substitution of natural gas imports with domestic production, remittances are at a peak, FDI is improving slightly.”
Currency gains are being supported by the central bank’s decision to end the FX foreign repatriation mechanism in December. “Once the repatriation mechanism was abolished, it meant that every single inflow coming into the country reflects directly on interbank liquidity,” Farahat said. “This, in tandem, should also reflect directly on EGP volatility against the USD.” The foreign repatriation mechanism was designed to reassure foreign investors by allowing them to repatriate their USD from the country at any point.