After the Ministry of Finance reduced the price of the US dollar used for customs to EGP16, down from EGP18.5 on 16 February, media outlets stated that the prices of a lot of products will decrease soon.
The prices of almost all products have hiked during the previous months after the Central Bank of Egypt (CBE) decided to float the Egyptian pound, which raised the price of the US dollar to EGP 19.56.
Although some media headlines said that prices will decrease within 45 days, investors believe that the prices won’t be reduced in the near days.
Fouad Amin, head of the Investors Association for 15 of May City, said that prices might not decline during the short-term period.
He believes that the exchange rate could be raised again, possibly prolonging investors’ reduction of their products’ prices.
“Manufacturers cannot get foreign currencies from banks; they still depend on the informal market, which is not selling as the previous term,” Amin stated, adding that the US dollar price decrease is just media talk and not true at all, as investors hardly find it in reality.
He said the decrease is temporary, because nothing changed, and Egyptian investors didn’t raise their prices until now. However, prices might get reduced if its price remains at EGP16 for some time.
“Investors don’t believe the picture is as bright as the government says it is,” Amin noted.
From another view point, Bahaa El-Adly, the head of Badr City’s Businessmen Association, said that prices of products may remain at their current level until the prices of foreign currencies stabilise.
He added that producers cannot reduce the price immediately because the demand is available, adding that once the demand decreases, prices might do so too.
El-Adly stated that no investor will reduce the price unless he is certain about the price, allowing the cost of production to be calculated.
Worried about another possible price increase, he added that only the market is responsible for pricing—not the media or the government.