The Egyptian pound remained stable against the US dollar last week, with the exchange rate averaging LE48.53 for buying and LE48.63 for selling, according to the Central Bank of Egypt.
The Egyptian pound is holding its value, according to Bloomberg Intelligence. This stability comes despite the Central Bank’s recent decision to cut interest rates by two per cent, a move that was less aggressive than what most analysts had expected.
In a new research note, the agency highlighted several factors supporting the pound’s strength, such as high real yields, steady investment, and stable revenues. The return on investments in Egypt remains attractive, and remittances from Egyptians working abroad and tourism revenues are holding steady, providing a solid foundation for the currency.
Globally,the US dollar weakened on Friday, as investors awaited the release of hotly-anticipated job market data and assessed the likelihood of a Federal Reserve interest rate reduction later this month.
In early European trading, the dollar index — which tracks the greenback against a basket of six currency peers — and dollar index futures had both fallen 0.3%, but were trading up about 0.2% over the past week.
Meanwhile, the euro rose by 0.2% against the dollar and sterling strengthened by 0.3%.
The dollar stalled in recent sessions amid a raft of soft labor market readings, with job openings and unemployment claims both pointing to a sustained cooling in the jobs picture.
Economists expect the data from the Labor Department’s Bureau of Labor Statistics to show that the U.S. added 75,000 roles during the month, up slightly from 73,000 in July.
Analysts have suggested that a soft or even tepid reading could all but cement expectations of a Fed rate reduction at the central bank’s September 16-17 gathering. According to CME’s FedWatch Tool, markets are pricing in a nearly 100% chance of a 25-basis point drawdown in borrowing costs from the Fed’s current target range of 4.25% to 4.5%.
Fed officials are facing pressures to both pillars of their mandate — keeping price growth stable and promoting maximum employment — although recent comments from policymakers have indicated that the supporting the labor market may be their current priority. Cutting interest rates can help to spur spending by businesses and consumers, albeit at the risk of pushing up lingering inflation.
