A Record Drop for the Egyptian Pound Against the Dollar | DW Arab News | Latest news and perspectives from around the world | DW

A Record Drop for the Egyptian Pound Against the Dollar |  DW Arab News |  Latest news and perspectives from around the world |  DW

A Record Drop for the Egyptian Pound Against the Dollar | DW Arab News | Latest news and perspectives from around the world | DW

Refinitiv data showed a decline Egyptian pound Up to 30 pounds against the dollar in volatile trade this morning (Wednesday, 11th January 2023). Egypt pledged a flexible exchange rate, a bigger role for the private sector and a package of currency and tax reforms as it agreed a $3 billion financial support package with the International Monetary Fund, a report released by the fund revealed on Tuesday.

The country was already under financial pressure before the war in Ukraine decimated tourism revenues, increased the cost of importing primary goods and prompted foreign investors to drain more than $20 billion from the economy.

Data released on Tuesday by the Central Agency for Public Mobilization and Statistics showed that annual consumer price inflation in Egyptian cities rose to 21.3 percent in December, the highest since late 2017, beating analysts’ expectations has.

The surge in urban consumer price inflation comes after a local currency devaluation in October and amid ongoing import restrictions. That was the median forecast in a Reuters poll of 15 economists inflation20.50 percent. Five economists also expected core inflation, due to be announced later Tuesday, to rise to an average of 23.6 percent after hitting 21.5 percent in November.

The central bank dropped the Egyptian pound by about 14.5 percent on October 27 and slowly and gradually dropped its value in November and December. “Food and beverage prices rose 4.6 percent month-on-month (up from 4.5 percent in November), mainly driven by prices for bread, grains, dairy, vegetables and meat,” said Allen Sandeep of Naeem Securities Brokerage.

Sandeep added that this was partly due to the pound’s 25 per cent devaluation in late October, but forecast further inflation. “Monthly inflation is up about 7 percent over three months… With the ongoing fresh devaluation, which we expect to come in at about 15 percent, we can expect annual CPI to hit 25 percent by February,” he said.

The price hike will increase pressure on the central bank’s Monetary Policy Committee to hike interest rates at its next meeting, scheduled for February 2nd.

HH/AF (Reuters/AFP)




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