The Egyptian pound continued its recovery journey against the US dollar and the basket of global and Arab currencies after a period of decline, as the US currency continued its decline against the Egyptian currency below the 49th level in all Egyptian banks after exceeding this level weeks ago.
This came in conjunction with the decline of the Egyptian stock index collectively at the end of today’s trading, and that the indices recorded a collective rise at the close of trading on Sunday.
The pound regains its strength
The pound’s recovery was supported by an increase in non-governmental foreign currency deposits in Egyptian banks, which witnessed a significant increase of more than USD 3 billion during the first seven months of this year, reaching USD 53.8 billion by the end of July 2024, compared to USD 50.5 billion by the end of December 2023, according to the latest Central Bank of Egypt data.
Egyptian banks received only $1.48 billion in foreign savings in July 2024, bringing foreign currency deposit balances from $52.31 billion in June 2024 to $53.8 billion in July. This increase represents the highest level since the beginning of the year.
The CBE’s monthly report also showed that the volume of foreign currency demand deposits stabilized at $12.92 billion, while term deposits and savings certificates rose to $40.8 billion.
In a related context, Egyptian banks increased the interest rate on dollar deposits, in line with the US Federal Reserve’s policy, which saw gradual increases in the interest rate to 5.5% from 0.25%, as part of its efforts to curb inflation.
Stock Exchange Today
The Egyptian Exchange concluded the session on Monday, September 2, 2024, with a collective decline in its indices, as the market capitalization lost EGP 6.941 billion to close at EGP 2.109 trillion.
The main index ‘EGX30’ fell by 0.55% to 30,731 points, while the EGX30 weighted index fell by 0.57% to close at 37,664 points, and the EGX30 Total Return Index fell by 0.55% to 13,323 points.
The EGX70 Equal Weights Index fell 0.38% to close at 7,114 points, and the EGX100 Equal Weights Index fell 0.47% to 10,196 points.
In terms of equities, Alexandria National Company for Financial Investments topped the list of highest performing stocks by 19.63% to EGP 19.56, followed by Ajwa for Food Industries – Egypt up 16.11% to EGP 83.26, and A Capital Holding up 13.79% to close at EGP 1.98. In fourth place came Egyptian Resorts (EGX:EGTS) up 6.72% to EGP 6.67, and fifth was Mena for Tourism and Real Estate Investment (EGX:MENA) up 5.77% at EGP 2.2 per share.
Yesterday’s worst performing stocks were Cairo Housing & Development (EGX:ELKA) down 7.23% to EGP 2.18, North Cairo Mills & Bakeries (EGX:MILS) down 5.96% to EGP 38.05, and Alexandria Mills & Bakeries (EGX:AFMC) down 5.63% to EGP 28.18. In fourth place were United Arab Stevedoring (EGX:UASG) down 4.97% to EGP 0.918, and Emaar Misr Development (EGX:EMFD) down 4.76% to EGP 7.6.
EUR Rebounds Despite Weak Data and Political Uncertainty
In Europe, the EUR/USD rose 0.2% to 1.1071, consolidating after earlier hitting 1.1043, its lowest level since August 19.
Data on manufacturing activity in the euro area remained in contraction territory in August, with the final Eurozone manufacturing PMI compiled by global S&P coming in at 45.8 in August, strongly below the 50 mark separating growth from contraction.
The European Central Bank cut interest rates in June in a bid to stimulate the region’s economy, and looks likely to do so again later this month after eurozone inflation fell to 2.2% in August, its lowest level in more than three years.
On the political front in Europe, the Alternative for Germany (AfD) became the first far-right party to win elections for a state legislature in Germany since World War II with its result in Thuringia.
The faltering power of the German government could complicate European politics at a time when the bloc’s other major power, France, is still struggling to form a government after snap elections in June and July.
GBP/USD rose 0.1% to 1.3138, as demand for sterling continued on expectations that the Bank of England will keep interest rates high for longer than the US and the Eurozone.
The Bank of England cut interest rates by 25 basis points on August 1 to 5%, and financial markets expect further cuts of 40 basis points by the end of the year.
JPY and yuan fall after PMI data
In Asia, the USD/JPY pair rose 0.4% to 146.69, with the yen slightly weakening after Japanese factory activity contracted again in August, a private sector survey showed earlier on Monday.
The final Japan Manufacturing PMI' Manufacturing PMI}} (PMI) rose to 49.8 in August versus 49.1 in July, rising from 49.5 in the fast reading. It remained below the 50.0 threshold separating growth from contraction for two consecutive months.
The yuan USD/CNY rose 0.3% to 7.1105, with the yuan weakening after China’s ‘official’ PMI data on Saturday gave the world’s second-largest economy the first insight into the performance of the world’s second-largest economy in August, with manufacturing activity falling to a six-month low and contracting for the fourth consecutive month.
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