Egypt 🇪🇬 devalues its pound, loses over 50% against US Dollars

Cash-strapped Egypt allows its currency to fall sharply against the dollar and hikes interest rates

CAIRO (AP) — The Egyptian pound slipped sharply against the dollar on Wednesday after the Central Bank of Egypt raised its main interest rate and said it would allow the currency's exchange rate to be set by market forces.

The measures were meant to combat inflationary waves and attract foreign investment as the country experiences a staggering shortage of foreign currency.

Following the announcement, the pound began floating and within hours lost more than 60% of its value against the dollar. By early afternoon, commercial banks were trading the U.S. currency at more than 50 pounds for $1, up from about 31 pounds for the dollar.

The central bank increased the key interest rate by 600 basis points to 27.75%. The overnight deposit and lending rate were also raised by 600 basis points to 27.25% and 28.25% respectively, the bank said in a statement.

The Egyptian economy has been hit hard by years of government austerity, the coronavirus pandemic, the fallout from the war in Ukraine, and most recently, the Israel-Hamas war in Gaza.

The war in Ukraine, which rattled the global economy, hit cash-strapped Egypt where it is financially vulnerable — the most populous Arab country is the world’s biggest importer of wheat and needs to buy a majority of its food from other countries to help feed its population of more than 104 million people.

Since January 2022, the Egyptian pound has lost around 50% of its value against the dollar.

The Central Bank of Egypt said its measures Wednesday would help end the black market in currencies and slow inflation, which reached unprecedented levels in recent months. The annual inflation rate was over 31% in January, according to official figures.

“The CBE will continue to target inflation as its nominal anchor, allowing the exchange rate to be determined by market forces,” the central bank said.

The authorities also said the Central Bank has managed to “secure funds” for market needs — an indication they expected the exchange rate to stabilize.

Analysts believe the source of the funds was a multi-billion dollar deal last week with an Emirati consortium to jointly develop the Mediterranean city of Ras el-Hekma, 350 kilometers (218 miles) northwest of Cairo. Egypt is to get $35 billion from that deal.

The rising cost of basic goods has deepened the hardships faced by middle-class and poor Egyptians. They have suffered from price hikes since the government embarked on an ambitious reform program in 2016 to overhaul the battered economy. Nearly 30% of Egyptians live in poverty, according to official figures.

Economists say the moves by the central bank were likely signs that the government is working to secure another financing package from the International Monetary Fund. Moving to a flexible exchange rate has been one of the key demands of the IMF.

James Swanton, an analyst with London-based Capital Economics, said they show that “policymakers are committed to the turn back toward economic orthodoxy."

"This is likely to pave the way for an IMF deal within hours,” he said.

https://uk.news.yahoo.com/cash-strapped-egypt-allows-currency-102832799.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAADz98vjP7qJCBuBxZD3ifOp9jw2vvOGy9AfX_3_Gq_vCzHty8sFpu0BXVpPIm8f8QLaW0JRyu5dcNYKUA4etQ3TBv8KPMfH-th2FBhtBWLTvq-9OjHDF3KAgczTjOit1UXtjRiGfUEIPScnrag4cASrG8oNWwolQvn032-8J3xSV

Lobatan

Everyone following in Tinubu footsteps.

I think the world need to find a way to move from the dependence on USD for almost everything. Black market won't let them rest too.

The Central Bank of Egypt said its measures Wednesday would help end the black market in currencies and slow inflation, which reached unprecedented levels in recent months. The annual inflation rate was over 31% in January, according to official figures.

One terrible thing about APC and their supporters is that they always look for means to justify the hardship they keep dumping on Nigerians.
Their supporters are so wicked and wretched that they want all Nigerians to live their impoverished life.
They blame car dealers, market women, traders and anyone for the country Economic and hunger problem but never blame the Government.
If Egypt currency is devalued by 50% which is about 1pounds to 50 dollars it is still far valuable than Naira.

Nairaland is unofficially owned by APC

Useless agbado miscreants report here now

Modified:

See the useless charlatans below. They are here already to justify the hardship brought upon them by thuvb

Na this kind news Apc dey use as positive.

Ok

Is this even a good or bad thing

Th whole world is reshaping..... Hopefully Nigeria reshaped to positivity
Buying bread at ₦1500 is not a good thing.... Spending 2k on a regular breakfast as a common tally clerk is depressing....


Ramadan is here... Please help me O'Lord

God bless Asiwaju Ahmed Bola Tinubu
May he live long to achieve his plans he has for Nigeria.
3 gbosa for Jagaban.
Gbosa
Gbosa
Gbola

This shouldn’t be an excuse for Nigeria and her citizens.

Now that's how to float a currency...

You devalue set it to a value you can defend for a while toll market forces kick in

I hope APC can see how you float

It's sure 99% of them won't even understand this

They must have things in place already. Not just doing stuffs without plans

E affect us how.

Mtchewwww

This will be a good news to the APC urchins. They find all negative news to defend their stupidditty. I'm not sure people who supports APC have a mind of their own. You cantt be that delusional just for free.

Ok

Agbadorians looking for everything to justify the great Tinubulation Nigerians are going through

Nigeria must be better. Patronize home made products

It is time for some mutual review between both countries. These are two of the largest economies in Africa FGS.

LegendHero:
Everyone following in Tinubu footsteps.

I think the world need to find a way to move from the dependence on USD for almost everything.

Bring forth the way and the world will gladly follow.But so far so good, the USA dollar have gotten a universal acceptance rating.

LegendHero:
Everyone following in Tinubu footsteps.

I think the world need to find a way to move from the dependence on USD for almost everything.

we are getting there gradually.

They couldn't learn from Nigeria

RoeEvi:
This shouldn’t be an excuse for Nigeria and her citizens.

Smh. Nigeria is not giving excuses, we can't keep using our hard earned forex to keep defending our naira against US dollars overvalued on the street and disgraced Binance by unpatriotic criminals.

All the enemies of Nigeria will lose las las. They will always lose. God bless Nigeria for ever! Check my signature for free stuffs!

This is the country Reno is using to justify why Nigeria should be happy Ukraine, a country fighting for survival, is donating grain to them. How can you be feeding on the reserve of a man bleeding and you are happily bragging about it ?

mrvitalis:
Now that's how to float a currency...

You devalue set it to a value you can defend for a while toll market forces kick in

I hope APC can see how you float

It's sure 99% of them won't even understand this

So what is the value Egypt CBN set it to? Abi you dey read another news?

The Egyptian pound slipped sharply against the dollar on Wednesday after the Central Bank of Egypt raised its main interest rate and said it would allow the currency's exchange rate to be set by market forces.

lol

LegendHero:
Everyone following in Tinubu footsteps.

I think the world need to find a way to move from the dependence on USD for almost everything. Black market won't let them rest too.

It's a shame u don't even understand the post🤦‍♂️🤦‍♂️