The World Bank agreed to provide Egypt with the second tranche worth $1bn of its $3bn total loan aimed at supporting job creation and spurring growth, according to a statement from the bank.
Asaad Alem, the World Bank’s country director for Egypt, Yemen and Djibouti, said that the bank is happy to continue supporting Egyptian reform programs aimed at creating jobs and increasing the competitiveness of Egypt’s business institutions.
As news of the loan broke, the value of the Egyptian pound depreciated as the US dollar registered a new record high against the pound.
The exchange rate has been seeing hikes since the beginning of the week. Bank officials attributed it to the high demand on the greenback.
According to Osama El-Menilawy, assistant general manager of the financial sector at a private bank operating in Egypt, the high demand on the dollar is caused by companies finalizing their budget and foreign companies repatriating their profits abroad, next to the usual demand by importers.
He added that foreign companies are worried about the exchange rate going further up; hence, they buy now to curb their losses.
Moreover, some importers believe they can import and make profits at the current rate, according to him.
He stressed that the rising exchange rate is nothing to worry about. “This is the nature of a free exchange rate driven by supply and demand,” he added.
In addition, he explained that the US dollar price will continue to rise as long as the demand continues with no resources to cover it until it stabilizes.
He noted that it will be hard to predict that level in a free market, as the Egyptian market is new to this experience.
Daily News Egypt