Egypt's economic credibility gains strong footholds
Egypt, Economics, 7/11/2001

A special significance was accorded this week to the floating of Egypt's first dollar denominated bonds in international markets as being one of the main instruments designed to prop up Egypt's financial and monetary policy.

In a recent ministerial economic group meeting, Minister of Economy and Foreign Trade Youssef Boutros Ghali affirmed that these bonds will boost Egypt's foreign currency reserve and ensure the private sector's demand for foreign currency funds.

Chairman of the Capital Market, Authority (CMA) Abdel Hamid Ibrahim asserted that demand on the first issue of the Egyptian bonds which exceeded three billion dollars, reflects confidence in the Egyptian economy as it mostly focused on the ten-year term bonds.

This also indirectly demonstrates the Egyptian economy's capability of generating foreign exchange resources over a future long-term phase.

"The bonds' issue also comes as a tangible proof of Egypt's positive economic indicators expected to improve in the upcoming stage," Ibrahim noted.

On his part, member of the Central Bank of Egypt's (CBE) Board of Directors Mohamed Younis confirmed that the unprecedented demand on the Egyptian dollar bonds has deepened world confidence in the strength of Egypt's economy and its capability of repaying its dues over a five or ten-year period.

To experts, the floating of the bonds will stimulate the market's activity, ensure Egypt's demand of foreign currencies and accentuate its presence on the world financial arena.

"Egypt's success at the international level soon upon releasing the dollar bonds clearly reflects its well-designed policies which mainly capitalize on the force of market mechanisms," experts added.

Giving a further boost to Egypt's financial and monetary policy, economic circles widely acclaimed the CBE's decision to raise the dollar-pound exchange rate to L.E. 3.90 against L.E. 3.85 at an increased rate of 1.5 per cent. This means widening the band in which it allowed the dollar to trade on either side of the core rate.

Express termed such a decision as a step in the right direction towards further flexibility, since Egypt has adopted the managed peg exchange rate system in January 2001.

Henceforth, experts called for freeing the dollar rates in accordance with the supply and demand forces so as to ensure a balanced and stable foreign exchange market.

"Such a new flexibility in the pound-dollar exchange rate will lead to avoiding the emergence of black markets and countering speculation operations which badly disrupts the market's stability," experts concluded.

Previous Stories:
  Adopting successful economic policy attracts more investments into Egypt   (7/10/2001)
  Deficit in trade balance goes down by L.E 319 million   (7/10/2001)
  Improvement of investments boost Egypt's euro bonds' assessment   (7/9/2001)

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