The black market for the dollar in Egypt.. How can you get rid of it?

Economist Medhat Nafie said that what Egyptian President Abdel Fattah El-Sisi said regarding the exchange rate of the Egyptian pound was clear and well-known, that if monetary policy, through the application of a flexible exchange rate, conflicts with the interest of national security, then the public interest will be preferred, and this is a settled issue.

In an interview with Al-Arabiya, Nafie added that the president stressed the adoption of a flexible exchange rate policy, and this is an appreciation for the independence of the Central Bank.

And the “Central” adopted a more flexible policy for the exchange rate, and stated that it would link the price of the dollar to a package of assets in a new index that it did not disclose, and this is the path of flexible control, according to Medhat Nafie.

He continued, “We do not have the luxury of complete flotation, because we have more demand for dollars than supply.”

He said, “If the Central Bank of Egypt adopts a less flexible policy during a specific period of time, this will create a parallel market or more than one parallel market, and this is a logical thing as long as there is dollar scarcity, and the quick solution that monetary, financial and commercial policy must work on is all directed towards providing revenue.” dollars for the banking system so that the black market does not become a market maker.”

He pointed out that the black market can currently play the role of a market maker, and it has a preference in information about the banking system, because the dollar needs of the banking sector are known, as well as the size of the dollar needs required to release imports, while we do not know the exact size of the black market.

Egyptian President Abdel Fattah El-Sisi had ruled out devaluing the Egyptian pound against the dollar, saying, “Many people are asking for flexibility in the exchange rate and we are flexible in it, but when it comes to national security and that this will waste the Egyptian people, no.”

The Egyptian president’s statements come as Egypt is awaiting talks with the International Monetary Fund (IMF) about the first review of the $3 billion financing program. Amid several demands from the fund that include the implementation of deals within the government offerings program, with real flexibility in pricing the Egyptian currency to ensure the success of the first review of the financing program.

Al-Sisi said during the National Youth Conference in Alexandria: “We are flexible in it… but when the issue is exposed to Egypt’s national security, and that the Egyptian people are lost… no, no, no, no.” “I speak seriously. I am talking about this topic on the air when the effect of the exchange rate is on the lives of Egyptians and may waste them. We do not sit in a place, we do not appreciate.”

It is noteworthy that the Central Bank of Egypt announced that it will link the price of the dollar to a package of assets in a new index that was not disclosed.

It is unlikely that the Central Bank of Egypt will move to a new devaluation of the pound before next September, with the receding economic pressures, expectations of achieving strong revenues from tourism, and a positive outlook on the offering program, according to what Citigroup revealed in recent statements.

Citigroup adopted more positive expectations for Egyptian bonds denominated in the Egyptian pound and the dollar in the short term. It also suggested postponing decisions related to the devaluation of the local currency until next September, coinciding with the date of the International Monetary Fund’s review of the $3 billion loan program granted to Egypt. He expected “reasonable stability” in the exchange market during the next two months.

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