The expected rush by Egyptian expatriates in the UAE to remit money following the pound’s devaluation has failed to materialise.
“A currency devaluation usually causes a wave of interest, but we have seen very little reaction today,” said Rashed Al Ansari, the general manager of Al Ansari Exchange.
“We think people are taking a wait-and-see approach, such has been the turmoil with the Egyptian economy. Obviously the Egyptian pound is now more attractive, as you can buy more of them for your dirhams, but I think the US dollar will still be attractive for Egyptians for some time.”
The currency was devalued to 8.85 pounds from the official rate of 7.73 pounds in a US$200 million auction on Monday.
The government of Abdel Fattah El Sisi took the decision to be more flexible in managing its pegged currency to kill off the black market for dollars and boost exports as they became nearly 14 per cent cheaper.
Ever since the 2011 revolution, US dollars have been bought and sold on the black market in Egypt as the population lost faith in its currency.
It took the market by surprise after the central bank governor complained in recent days in the Egyptian media that the pound was not fairly valued and denied any plans to devalue the currency.
It was not only the market that was taken by surprise.
“All of my savings in Egypt are messed up,” said Amir Sharara, an Egyptian marketing operations manager at a telecommunications company, who has lived in Dubai for four years. “I don’t know if the interest rate will change, but definitely it’s not good.”
Mr Sharara has taken out a loan in the UAE and had been using a portion of his savings in Egypt to repay it. It went towards an investment venture in Dubai.
And while the interest rates on his savings account will remain the same, the devaluation means that it will take more savings to meet the amount that he was previously paying. “If I have 100 Egyptian pounds [Dh46], that’s now worth only 87, so imagine if I have a big [amount in savings],” he said.
Ola Naguib, another Egyptian media professional living in Dubai, said that she is insulated from the devaluation as she and her family are outside the country. However, Ms Naguib says anything that puts trust back into the Egyptian pound would help.
“People were paid in Egyptian pounds and immediately bought US dollars or gold or something which had a definite value,” she said. “People were setting up businesses here in Dubai so they could get paid here, in dirhams, rather than in Egypt. There have been tricks and cons and connivances ever since the revolution because of the pound, so maybe this will help.”
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