Egyptian Pound Slides Further After Central Bank’s Moves

Stacks of money are pictured as an employee counts them at a bank in Cairo September 4, 2014. (Reuters)
Stacks of money are pictured as an employee counts them at a bank in Cairo September 4, 2014. (Reuters)
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Egyptian Pound Slides Further After Central Bank’s Moves

Stacks of money are pictured as an employee counts them at a bank in Cairo September 4, 2014. (Reuters)
Stacks of money are pictured as an employee counts them at a bank in Cairo September 4, 2014. (Reuters)

The Egyptian pound slipped further against the dollar on Wednesday, after Egypt’s Central Bank raised its main interest rate and devalued the local currency by 14%.

The moves by the Central Bank of Egypt came to face inflationary pressures triggered by the coronavirus pandemic and Russia’s war in Ukraine, which hiked oil prices to record highs.

Banks were selling the US currency at more than 18.5 pounds while buying it at over 18.45. That’s up from an average of 15.6 pounds for $1 before the central bank’s decision on Monday.

The central bank increased the key interest rate by 100 basis points to reach 9.75%. The overnight deposit and lending rate were also raised by 100 basis points each to reach 9.25% and 10.25% respectively, the bank said.

The bank citied the war in Ukraine that has shaken the global economy and threatened food supplies and livelihoods of people across the world.

Economists have said the moves were likely signs that the government is working to secure another financing package from the International Monetary Fund, according to The Associated Press.

Over the past weeks, residents have reported rises in the price of bread, fresh vegetables and fruits due to higher transport costs.

On Tuesday, Prime Minister Mustafa Madbouly said they were working on reconstructing the 2022-2023 budget to be prepared for “the most pessimistic scenarios.”

He said the main priority for the government is to provide primary commodities to citizens, highlighting the decisions and incentives announced recently to support local farmers to increase wheat production.

The state's top priority now was to ensure the availability of essential commodities and food products in the markets and continue efforts related to controlling market prices, said the Prime Minister.

According to Madbouly, the Russia-Ukraine crisis has placed inflationary pressures on the world, especially on fuel and food prices.

Separately, Madbouly received Deputy Chairman of Abu Dhabi Co-operative Society Saeed Eid Saeed al-Ghafli, accompanied by an Emirati delegation.

Ghafli lauded deeply-rooted relations between the two countries, which positively impacted the economic and commercial cooperation between the two countries.

He expressed his company's keenness in investing in the retail sector in Egypt.

Madbouly, in turn, praised deeply-rooted relations between the two countries at the popular and presidential levels, calling for promoting bilateral cooperation in various fields, particularly in the economic sector.

The premier welcomed initiatives to strengthen cooperation frameworks and encourage more investments between the two countries.



Gold Gains on Safe-haven Demand as Trump Expands Trade War

FILE PHOTO: An employee places ingots of 99.99 percent pure gold in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: An employee places ingots of 99.99 percent pure gold in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo
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Gold Gains on Safe-haven Demand as Trump Expands Trade War

FILE PHOTO: An employee places ingots of 99.99 percent pure gold in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: An employee places ingots of 99.99 percent pure gold in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo

Gold prices rose for a third straight session on Friday, as US President Donald Trump's announcement of new tariffs on Canada and broader tariff threats against other trading partners lifted demand for the safe-haven asset.
Spot gold was up 0.5% to $3,339.99 per ounce, as of 0755 GMT. US gold futures gained 0.8% to $3,351.
"We're seeing some growing demand for gold as a haven. There are investors looking for some safety asset despite stock markets hitting highs. And any dip in gold is seen as a buying opportunity now," said Carlo Alberto De Casa, an external analyst at Swissquote.
On Thursday, Trump said US would impose a 35% tariff on imports from Canada and planned to impose blanket duties of 15% or 20% on most other trade partners, Reuters said.
This follows Wednesday's announcement of a 50% tariff on US copper imports and a similar levy on goods from Brazil, along with tariff notifications sent earlier to other trading partners.
Trump also said the European Union could receive a letter on tariff rates by Friday, throwing into question the progress of trade talks between Washington and the 27-nation bloc.
"Rising trade tensions have reinvigorated demand for haven assets such as gold amid the prospect of an economic slowdown. The more dovish Fed is also boosting investor appetite," analysts at ANZ wrote in a note.
Data on Thursday showed weekly jobless claims in the US fell unexpectedly to a seven-week low, indicating stable employment levels.
Federal Reserve Governor Christopher Waller on Thursday reiterated his belief the central bank could cut interest rates at its policy meeting later this month.
Meanwhile, Fed Bank of San Francisco President Mary Daly said two rate cuts remain on the table for this year.
Lower rates boost non-yielding gold's appeal.
Elsewhere, spot silver rose 0.9% to $37.37 per ounce, platinum fell 1% to $1,346.81 and palladium climbed 1.3% to $1,156.44.