As of Thursday, 5 January, the Egyptian pound has fallen to an all time low of EGP 27.25 against the United States dollar. This marks the most devastating devaluation since October 2022, and is yet another indication of the country’s severe scarcity of foreign currency.
The new devaluation follows the International Monetary Fund’s (IMF) agreement to lend Cairo USD 3 billion (EGP 81.7 billion). The loan criteria stipulated Egypt adopt a free exchange rate regime with a flexible monetary policy; the pound has since dropped by approximately 6 percent against the dollar, a total of over 26 percent in the fiscal year 2022/23.
The Financial Times estimate that the pound will continue to depreciate.
Banque Misr and the National Bank of Egypt (NBE) announced on Wednesday, 4 January, that they will be offering a one-year maturity savings certificate with a 25 percent interest rate as a move to contain rising inflation and encourage savings. This is the highest yield on record for both banks, and comes as the local market anticipates further devaluation of the pound.
In 2022, the Central Bank of Egypt (CBE) revoked the need for importers to use letters of credit, a measure intended to conserve foreign currency reserves by slowing down the import process. However, with over USD 9.5 billion (EGP 258.8 billion) worth of imports blocked in Egyptian ports due to a lack of foreign currency liquidity, Cairo continues to grapple with back-to-back devaluations.
Egyptian President Abdel Fattah al-Sisi has, in turn, called for the release of these goods in quicker strides moving forward.