Remittances from Egyptians abroad increased by 20 percent year-on-year in the three months following the country’s November currency.
According to the Central Bank of Egypt, a staggering $5 billion was sent home by Egyptians abroad who are now a key target of the apex bank as it seeks to improve liquidity of the country’s foreign exchange market.
Remittances for the month of January were up 23 percent year-on-year, reaching $1.6 billion, said a statement by the central bank of Egypt, a country many analysts are quick to compare with Nigeria.
The authorities floated the Egyptian pound on Nov. 3, aiming to unlock foreign currency inflows and crush a black market for dollars that had discouraged people from channeling foreign currency through the banking system.
Reports however, say, the Egyptian pound weakened further Monday as dollar demand from importers rose ahead of the Muslim holy month of Ramadan, when food consumption usually increases.
Ramadan, Islam’s holy month during which believers abstain from eating and drinking during daylight hours, is set to start in May this year and often sees Egyptian families stock up on various food items and other goods.
Banks were selling the U.S. dollar for between 16.9-16.85 pounds, weaker than the 16.1-16.2 per dollar rates they were selling at last week.
“Now is the time for importers to make the orders for Ramadan so demand has risen over the past two weeks,” said one Cairo-based banker, adding that demand for dollars began piling up again at banks.
Egypt’s central bank abandoned its currency peg of 8.8 pounds to the U.S. dollar on Nov. 3, hoping to unlock currency inflows and bring back foreign investors who were driven away after the 2011 uprising that ousted Hosni Mubarak.
The float more than halved the pound’s value to nearly 20 pounds to the dollar by December. It has since rallied, however, dipping below 16 per dollar in February on the back of lower dollar demand for imports.
