Bankers and businessmen said on Monday that a small black market for the Egyptian pound has reappeared in the past few days, with major hard currency sources negatively affected by the spread of the Coronavirus pandemic.
They said that informal transactions in the black market took place at the price of 16.15 pounds for the dollar, compared to the offer price of 15.75 pounds at exchange offices and banks.
Suspension of flights
Last week, the government suspended all commercial flights in all Egypt airports, in an effort to contain the outbreak, in a devastating move for the tourism sector, which brought in the country $ 12.5 billion in 2019.
Trade is declining
An economic newspaper reported that the number of container ships passing through the Suez Canal fell 7.3 percent in February, in an indication that the Corona virus was reducing global trade.
Economists say that active trading in Egyptian treasury bills to benefit from interest rate differentials has slowed in the past few weeks, with foreign investors withdrawing dollars from Egypt.
But despite this, and with foreign reserves amounting to $ 45.51 billion at the end of February, Egypt has in its coffers enough to support the currency, which has lost little of its value in the official market since the outbreak of the epidemic compared to the currencies of other emerging market countries such as Russia, Turkey and South Africa.
Naeem Brokerage said in a note that the dollar is trading between 16.10 and 16.15 pounds in the parallel market, but it is meager trading with importers postponing orders.
The memo said: “Banks have started rationalizing their foreign exchange balances (prioritizing necessary imports) in order to cope with declining inflows from tourism and the displacement of hot money.”