Egypt’s pound sinks to new low in biggest fall since October devaluation

Egypt’s pound sinks to new low in biggest fall since October devaluation

Egypt’s pound plunged on Wednesday to a record low, in the latest sign of the country’s severe foreign currency crunch two months after Cairo agreed a $3bn rescue loan from the IMF.

The currency dropped 6 per cent to 26.4 to the US dollar in the steepest slide since the Central Bank of Egypt in late October devalued the pound in an effort to clinch the IMF deal.

Wednesday’s slide comes as billions of dollars of imports are blocked in Egyptian ports because local banks are unable to secure enough dollars to pay for them because of the shortage of foreign currency.

Russia’s invasion of Ukraine in February 2022 spurred outflows of $20bn in a flight to safety by foreign debt investors. The war also caused prices for raw materials to soar, dealing a powerful blow to Egypt, the world’s biggest importer of wheat.

The IMF pact included a requirement that Egypt implement “a permanent shift to a flexible exchange rate regime” instead of using foreign currency reserves to keep the exchange rate at a targeted level. The CBE devalued the pound in March, before the October move, with the currency losing 40 per cent of its value against the dollar over the period.

Mohamed