Egypt Daily News – Dr. Ali Al-Idrissi, an economist, highlighted the key reasons behind the decline of the Egyptian pound against the dollar and the significant drop in stock market indices in Egypt. Here are the main points from his analysis:
- Outflow of Hot Money: There has been a notable outflow of “hot money” from the Egyptian market, amounting to approximately $12 billion over the past two days. This has largely been driven by foreign investors as they attempt to mitigate losses resulting from declines in global stock markets.
- Impact on the Stock Market: The exits of foreign investments have led to a significant decline in the Egyptian Stock Market, with the main index “EGX30” seeing a drop of about 2.19%. The overall market value has decreased by approximately 100 billion pounds.
- Influence of the International Monetary Fund (IMF): The IMF has reinforced the importance of maintaining a flexible exchange rate, allowing for adjustments based on supply and demand without restrictions. Interventions by the Central Bank are limited to extreme fluctuations.
- Geopolitical Tensions: Regional geopolitical tensions have further pressured the market, prompting investors to seek stability by maintaining high interest rates in Egypt, thereby affecting investment decisions.
- Global Market Trends: As international stock exchanges experience substantial losses, this trend is mirrored in the Egyptian market, leading to a broader negative impact on investor confidence.
He also noted that recent data from the U.S. could influence the Federal Reserve’s decisions regarding interest rates, suggesting a potential cut of 25 basis points, while emphasizing the importance of monitoring significant fluctuations in currencies like the yen.
Overall, these factors combined have created a challenging environment for the Egyptian economy, with significant implications for both currency valuation and stock market performance.
