The exchange rate of the Saudi riyal against the Egyptian pound witnessed relative stability in today's trading, within the framework of the changes witnessed by the exchange market in Egypt after the Central Bank's decision to fully liberalize the exchange rate in March 2024. This stability reflects a state of temporary balance between supply and demand for the Saudi currency, which is of particular importance in the Egyptian economy.
Saudi Riyal exchange rates in major Egyptian banks today
According to the latest updates from banks, the average exchange rate of the Saudi riyal at the Central Bank of Egypt was approximately 14.03 Egyptian pounds for buying and 14.07 Egyptian pounds for selling. Prices varied slightly among major commercial banks, as follows:
- National Bank of Egypt: 13.95 Egyptian pounds for buying, and 14.03 Egyptian pounds for selling.
- Bank of Egypt: 13.95 Egyptian pounds for buying, and 14.03 Egyptian pounds for selling.
- Commercial International Bank (CIB): 13.97 EGP for buying, and 14.02 EGP for selling.
- Bank of Alexandria: 13.92 EGP for buying, and 14.02 EGP for selling.
Compared to yesterday’s transactions, there is a significant convergence in prices, with the riyal recording 14.02 pounds for buying and 14.06 pounds for selling at the Central Bank, indicating a calming of the fluctuations that immediately followed the flotation decision.
Background to the decision to liberalize the exchange rate and its impact
The current stability of the riyal's exchange rate comes within a broader economic context. In early March 2024, the Central Bank of Egypt took the bold step of fully liberalizing the Egyptian pound's exchange rate, allowing it to float freely according to supply and demand, after years of partially managing it. The aim of this decision was to eliminate the parallel (black) market for currency, which had caused deep economic distortions, as well as to attract foreign direct investment and meet the requirements of the IMF-backed economic reform program. This move initially led to a significant depreciation of the pound before it began to find a new equilibrium against major currencies, including the Saudi riyal.
The importance of the Saudi Riyal exchange rate to Egypt
The Saudi riyal exchange rate is of exceptional importance to the Egyptian economy for several key reasons:
- Remittances from Egyptians working abroad: Saudi Arabia is the primary destination for Egyptians working abroad, and their remittances constitute a vital source of hard currency for Egypt. The stability of the official exchange rate encourages them to transfer their money through official banking channels rather than the parallel market, thus bolstering the country's foreign currency reserves.
- Hajj and Umrah seasons: Hundreds of thousands of Egyptians travel to the Kingdom annually to perform Hajj and Umrah. The exchange rate of the Saudi Riyal directly impacts the cost of these religious journeys, including airfare, accommodation, and transportation. A stable exchange rate allows pilgrims to better plan their travel finances.
- Trade and Investment Relations: Saudi Arabia is a strategic trading partner and investor in Egypt. A stable and transparent exchange rate facilitates bilateral trade and encourages Saudi investors to inject more funds into the Egyptian market, given the elimination of the risk of unexpected exchange rate fluctuations.
In conclusion, the price of the Saudi Riyal remains an important indicator reflecting not only the strong bilateral economic relations between Egypt and the Kingdom, but also the extent to which recent monetary reform policies have succeeded in achieving the desired stability in the Egyptian exchange market.
