The Egyptian pound fell the most in a single day since the cash-strapped government agreed to a $3 billion International Monetary Fund deal in mid-December, according to authorities.
The pound declined from approximately 24.7 to slightly over 26.3 to the dollar three weeks after Egypt and the IMF formally finalised the aid package, which was agreed in exchange for a number of economic reforms adopted by the country’s Central Bank, including a shift to a flexible exchange rate.
The package includes an additional $14 billion in potential finance for Egypt.
Years of government austerity, the coronavirus outbreak, and the consequences from the Ukraine war have all had a significant impact on the Egyptian economy. Egypt is the world’s largest importer of wheat, with the majority of its imports typically coming from Eastern Europe.
The Egyptian pound has lost more than 60% of its value versus the dollar since the beginning of 2022, and the government is currently experiencing a foreign money shortage.
Egypt has also been plagued by growing inflation in recent months, with the annual average exceeding 18% in November. The Central Bank has attempted to contain the increase by hiking interest rates.
The National Bank of Egypt and Banque Misr, two of Egypt’s state-run banks, announced yield saving certificates with 25% interest rates, which experts feel is another attempt to control inflation.
Most Egyptians rely on government subsidies to buy necessities like bread, programmes that have been in place for decades. According to government statistics, about one-third of Egypt’s 104 million inhabitants are poor.
