The Egyptian pound has plunged to its lowest level in history against the US dollar today, Sunday, reaching 51.21 EGP per dollar at several banks.

The Egyptian pound has fallen to its lowest value since devaluation in March.

Bank of America sees that the exchange rate of the Egyptian pound is close to its fair value, expecting its value to rise in the short term on the back of cash flows from the UAE,

The Egyptian pound has hit a fresh low record against the US dollar, recording EGP 45 on Wednesday, March 6th.

Five Egyptian banks have imposed new restrictions on cash withdrawals and spending abroad amid the worsening foreign currency crisis, Bloomberg reported.

Egypt has no plans to peg its pound to a basket of currencies, an official told Asharq Business.

Standard Chartered Bank is still expecting a fourth devaluation, possibly the last, of the Egyptian pound, according to MENA economist at Standard Chartered Carla Slim.

Japan-based Mitsubishi UFJ Financial Group (MUFG) is anticipating a further devaluation of the Egyptian pound soon amid the current shortage of foreign currency.

“This summer season can be an important short-term stabilizer until we start getting serious reviews again in September and October,” said Costa, who is also the head of strategy in central & eastern Europe, Middle East and Africa.

Egyptian Prime Minister Mostafa Madbouly said that estimations of the hard currency are overstated and that the Egyptian pound is undervalued.

Another sharp devaluation of the pound before the end of fiscal year (FY) 2022/2023 could hinder the government’s target to achieve a 6.5% budget deficit of gross domestic product (GDP) as well as stabilization of the country’s debt-to-GDP ratio, Citigroup’s London-based Head of CEEMEA strategy Luis Costa highlighted.

The dilemma is for the Egyptian authorities to weigh the costs of devaluing the currency and moving to a flexible exchange rate regime against potential economic risks from the continuation of the parallel market, according to Goldman Sachs.

The futures contracts for the Egyptian pound for 12 months plunged by more than 4% against the US dollar to EGP 44.4, Asharq Business reported on April 18th.

HSBC indicated that the decline in the exchange rate of the pound would add additional burdens to the already high prices, and may raise the inflation rate above 40% during the coming months.

The weak performance of EGP came after traders bet on another devaluation amid growing pressures on the currency.

Egypt will value the state assets offered for sale in US dollars or Egyptian pounds.

In terms of the 46-month $3 billion arrangement under the Extended Fund Facility (EFF) backed by the International Bank (IMF) for Egypt, Credit Suisse expects consequent progress, especially in the face of severe economic pressure, and the necessary political commitment to prevent a credit event.

“The lack of decisively hawkish action by the central bank of Egypt raises questions around the credibility of its commitment to deliver in accordance with its inflation-targeting mandate,” the strategists wrote. “Real interest rates remain negative both on a backward- and forward-looking basis.”