Egyptian Pound’s Dramatic Plunge

Egyptian Pound’s Dramatic Plunge

Egypt’s pound started the year with another dramatic plunge against the US dollar, piling yet more pressure on consumers in the Middle East’s most populous country.

A 17% fall in the currency over the past two weeks has been taken as a sign the North African nation is finally embracing what it calls a flexible foreign-exchange rate after years of closely managing the pound. A promise to do so helped Egypt clinch a $3 billion loan from the International Monetary Fund — a deal that’s supposed to unlock much larger financial aid and investment from its allies in the Gulf and beyond.

The pound has now lost about 33% of its value since late October, with the official rate almost closing the gap with that on the local black market for US dollars, which emerged as Egypt struggled with its worst foreign-currency crunch in years. Egypt’s economy was heavily exposed to the shockwaves of Russia’s invasion of Ukraine, which sent food import bills soaring and prompted foreign portfolio investors to pull more than $20 billion from what had been a favorite emerging market.

Authorities have now devalued the pound three times in the past year. And while a more flexible currency has been