Economic Expert: Egyptian Pound to Stabilize Between LE 54-57 Amidst Global Tensions

Economist Mohamed Anis has characterized the recent declines on the Egyptian Exchange as "paper losses" rather than concrete, realized losses. In a phone interview with “Hadith al-Qahira” (Cairo Talk), he explained that the downturn is primarily due to the sale of shares to generate liquidity for the forthcoming initial public offering (IPO) of Banque du Caire. This is compounded by the exit of foreign investments from stocks and bonds, coinciding with an outflow of "hot money."

Anis identified two main factors contributing to the stock market's decline. Firstly, individual and institutional investors are selling portions of their holdings to raise the necessary liquidity for participating in major public offerings, a recurring pattern in the Egyptian market, currently exemplified by the Banque du Caire IPO. Secondly, foreign investment managers are opting to sell, alongside the withdrawal of "hot money" from bond and equity markets, which has occurred concurrently with selling pressure from local investors.

The economic expert further clarified that a decrease in the value of investment portfolios does not automatically signify actual losses. He noted that an investor experiencing a 90 percent portfolio value reduction has likely selected unsuitable stocks or made purchases at an inopportune time, underscoring the importance of analyzing stock strength before investing. Anis advised investors against succumbing to fear and selling stocks during market downturns. Instead, he recommended identifying the optimal time to restructure investment portfolios rather than making hasty sell decisions based on short-term market fluctuations.

Regarding the foreign exchange market, Anis projected that the US dollar-Egyptian pound exchange rate is expected to stabilize within the range of LE 54-57 over the next two months. This forecast is influenced by the economic repercussions arising from the military conflict between the US and Iran.