Egypt’s pound plunges to new low as authorities try to stem currency crisis

Egypt’s pound plunges to new low as authorities try to stem currency crisis

Egypt allowed its pound to tumble to a new low on Wednesday as the country struggles with a foreign currency crisis that is choking businesses.

The pound plunged as much as 14 per cent to trade at 32.2 to the US dollar.

The slump in the currency comes after Egypt has agreed to move to a flexible currency regime as part of an IMF $3bn bailout intended to help relieve a nearly year-long foreign currency shortage.

Since the central bank said it would move to a flexible currency rate in October, the pound has lost nearly 35 per cent as it has allowed it to devalue in phases. But analysts have warned that it has further to depreciate to ensure supply-demand equilibrium is restored to the foreign exchange market.

The weakness of the pound is adding to the pain of millions of Egyptians as it fuels inflationary pressure, with urban inflation hitting 21.3 per cent in December, its highest level in years.

It is estimated that 60 per cent of Egypt’s 100mn population lives below or just above the poverty line.

The Arab state has been hit by the headwinds of Russia’s invasion of Ukraine, which drove energy and food prices higher. It also triggered capital