Research article reveals reasons for not falling prices with the fall of the "dollar"


A research paper revealed the reasons for the fall in prices on the Egyptian markets despite the fall of the dollar, which lost around £ 120 value compared to the Egyptian pound, as follows:

Traders fear that the decline will be temporary, and the dollar will rise again, especially since the decline came back strongly from the beginning of 2019.

2 – Lack of real market controls and follow-up and weakness of market controls.

3 – The price of goods is determined to reduce according to what is known as the commercial cycle, which extends from 3 to 4 months.

4. The recession in the market and the decline in purchasing power have not encouraged traders to lower their prices.

5. The expected increase in prices and other production costs will contribute to the non-reduction of the price of goods and products, including electricity, water and petroleum products, thereby increasing production and transport costs.

6- Not to devalue the customs dollar.

7. Greed traders and their desire to achieve the highest profitability.

The paper expected the dollar to fall in the coming period to 1 July 2019 (at least the start of the new financial year), which will affect the prices of raw materials and products on the Egyptian market, or at least not rise. as electricity prices rise.

Dr. Abdel Moneim El Sayed, director of the Cairo Center for Economic Studies, said the US dollar continues the losses against the Egyptian pound, which began since the beginning of the year 2019. The dollar fell against the pound (or the rise in the pound against the dollar) to 120 piasters% From the value of the dollar exchange rate against the pound, where the dollar exchange rate of 16.7 pounds at the level of the purchase of the dollar.

The Egyptian pound recorded the highest level in the last two years, indicating that the depreciation of the dollar against the pound was expected, as all economic indicators confirm the improvement of the Egyptian economic situation.

1 – The trade dispute and the trade war between China and America put pressure on the currencies of emerging markets, including Egypt.

2. The World Bank's forecast for 2018 that the exchange rate will remain stable in 2019 or increase by 5%.

Trade war against Asian economies.

4 – Worries about Britain's departure from the European Union.

All these factors would have increased the exchange rate of the dollar against the pound or at least the stability in 2019.

He attributed the appreciation of the Egyptian pound against the dollar to various factors and reasons, perhaps the most important:

Firstly, foreign exchange inflows increased as foreign investment in government debt instruments increased, reaching $ 16.8 billion in mid-April 2019 and reaching $ 17.8 billion by mid-May 2018. Acquisition by foreign investors of local debt instruments increased by 40% 2019

Egypt's position as an attractive country for investing in debt instruments is not expected to be affected. Investors borrow currencies with low interest rates and invest in high interest rates, including Egypt.

That is why Egypt remains attractive for foreign investors for a long time, because the Egyptian interest rate on debt instruments remains high and the Egyptian risk level is low compared to other emerging emerging countries.

Secondly, foreign exchange reserves in Egypt rose to $ 44.3 billion

Thirdly, the increase in income from the tourism sector: the tourism sector in Egypt saw the income from tourism increase in 2018 with an increase of 16.5% to $ 11.3 billion. Tourism contributed 11.9% of Egypt's GDP.

Fourth, the spending budget for petroleum products has fallen after the discovery of natural gas and the achievement of self-sufficiency of natural gas in Egypt. This has led to offering foreign currencies and a decrease in demand for them, which in turn has saved $ 3 billion annually.

Fifth, the increase in remittances from employees abroad, where the value of remittances from employees abroad was $ 25.5 billion, where it reached $ 2.3 billion in March, which was $ 1.8 billion in February 2019, an increase of 23.5%

Sixth: the abolition of the central bank transfer mechanism for foreigners, led to the creation of liquidity and the abundance of foreign currency at banks, and this decision to direct investment funds to the market, and contributed to the recovery of the confidence of global institutions in the Egyptian market.

Seventh, the increase in the creditworthiness of Egypt has helped to increase the confidence of foreign investors to enter the Egyptian market, whether it is on the Egyptian stock exchange, and also in investments in government debt instruments, the volume of foreign Investments in the stock market and government debt instruments amounted to 26 billion dollars

Eighth: the increase in Egyptian exports, where Egyptian exports rose by 11.6% in 2018 to $ 25.5 billion due to the increase in oil exports and the increase in exports of agricultural crops.

Ninth: The fall in imports, as the import invoice from abroad fell, to a range of 55 to 60 billion dollars a year, whereas previously it was in the range of 75-80 billion dollars a year.

This is due to the rationalization rules and the tightening of the import process and to the establishment of restrictions and rules that reduce the import invoice from abroad and resort to the local alternative and away from random imports.

Tenth: the increase in the volume of foreign exchange inflows since the start of the economic reform policy and the floating exchange rate of the pound, which contributed to the increase in the supply of the dollar, where the cash flow since 2016 has been more than 160 billion dollar.


$ 18 billion issue of international bonds

26 billion dollars in foreign investments in the stock market and investments in treasury paper

Saudi Arabia is depositing 3 billion dollars

15 billion dollars in international loans

$ 98 billion in direct cash flows from investments, exports and other resources.

Despite the fall in the exchange rate of the dollar against the Egyptian pound in the range of 120 piasters by 7.5% and the progress and improvement of 5 fundamental dollar resources to Egypt, the main tourism, remittances and foreign investments in debt instruments and the output of the Suez Canal.

The country is on its way to a growth rate of 6% in the coming year 2019-2020. Most of the economic and financial indicators of the Egyptian economy have improved and international institutions have praised the Egyptian economy and Egyptian economic reform policy. however, products in Egypt have not fallen in most products offered on the Egyptian market.

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