CAIRO, 5 January 2005 — Egypt’s central bank said yesterday it was not looking for the Egyptian pound to be revalued against the dollar as the currency strengthened to less than 6 pounds to the dollar for the first time since mid-2003.
Sub-Governor Atef Ibrahim also told Reuters that turnover on the foreign exchange interbank market had soared to $120 million on Monday, compared with around $20 million per session initially after the market was formally launched on Dec. 23. Turnover figures for yesterday’s session were not immediately available. “We are not looking forward to any revaluation of the pound. All we would like to see is a fair value for the pound and supply and demand to reach a break-even point that is practical for the economy to grow,” he said. Ibrahim has previously said the central bank was not targeting a stronger pound. The session closed with the pound at 5.9919 to the dollar, compared to Monday’s close of 6.0350 pounds. The pound has strengthened 3.8 percent since the market’s launch when the currency was trading at about 6.22 to the greenback.
Bankers said a thriving tourist industry had brought extra dollars into Egypt. They said a stronger pound to the dollar could make Egypt modestly more expensive but many visitors were Europeans who were benefiting from the strength of the euro.
They said the interbank market had helped liquidity because banks, who previously held dollars tightly, were now willing to sell because there was a reliable mechanism in place to buy them back if needed. “Banks are liquid in dollars due to the new interbank mechanism ... Everyone is keen to sell (dollars) before rates go further down,” said one forex dealer. Several bankers said there had been no sign of central bank intervention despite the strengthening dollar.