Home Economy Egyption warned against turning dollar bill into local currency

Egyption warned against turning dollar bill into local currency

By NNN-KUNA

Cairo : Egyptian economists have attributed the drop in the USD to the plenty of supply in the market thanks to Arab tourism, expatriates’ remittances and the rise of real estate and building projects that need local currency more.

They also warned the Egyptian people against turning their bank deposits from the USD to the Egyptian pound urging the Central Bank of Egypt (CBE) to raise the interest rate on the native currency.

Talking to the Kuwait News Agency (KUNA), economic expert Rashad Abdou, from the Arab Academy for Maritime Transport, said the market was determined by the rule of supply and demand and that most Egyptians “do not want the USD at present due to the higher prices of the imported goods.”

He added that Egyptians had other priorities that basically need the local currency such as the private tuition sessions, the school clothes and supplies and cell phone bills.

“Rarely can you find an Egyptian who does not have a mobile,” Abdou said noting that mobile bills cost Egyptians a lot, “Even many people are so proud to have two or more.” On the fall of the USD exchange rate, he said it would boost the tourist industry through attracting more foreign tourists, encourage investments and help boost exports.

Over the past three years the USD has almost been stable at the average of LE 5.75 following the flotation of the pound.

Abdou confirmed the uniform value of the USD reserves like gold and real estate saying that many Egyptians would not give it up. He noted that the ups and downs of the dollar exchange rate were temporary, prompted by supply and demand.

The plenty of the USD supply in the Egyptian market was attributed by professor Sherif Kassem, Academy Deputy Chairman, to the rise in the Arab tourism to the country, the return of Egyptians working in the Gulf for summer holidays.

Other factors also include the rise in the Suez Canal revenues to USD four billion, added to other USD six billion from tourism.

Kassem warned both investors and citizens not to withdraw their dollar deposits for the “temporary slip” of the US currency. People have to maintain “balanced basket of reserves” according to their potential future needs just as nations do.

He also urged the state and the CBE to raise the interest rate on the Egyptian pound.

As for the impact of the dollar drop on the Egyptian economy, he said he did not believe that a drop worth pt five would affect the national economy much.

He also expected the US dollar to rise soon for the Ummrah (Lesser Pilgrimage) during the fasting month of Ramadan as well as for import purposes during the Holy Month.

One third of experts adopted the view that the rise in the Egyptian pound deposits was the result of the “distinguished” interest rate banks offered which he said was higher than the rate on the dollar.

Economist Youssef Serri said that most of the dollar remittances by Egyptian migrant labour were turned into the local currency for buying lands and flats, as the best investment favored by many Egyptians at present.

The USD exchange rate fell from LE 5.75 to LE 5.69 and then to LE 5.64 over the past two weeks.