Trade in local currency may boost Egypt’s economic recovery

Trade in local currency may boost Egypt’s economic recovery

Egypt has started trading with other countries using their own currencies instead of the USD dollar. This comes as the country has agreed to import products from Russia and India using the Russian ruble and the Indian rupee. Accordingly, Egypt will no longer need to secure USD in order to import goods from both countries. Since 2018, the local currency settlement (LCS) mechanism has been implemented and embraced by a number of countries, including Malaysia, Japan, Thailand, and China. This helped maintain a positive LCS growth trend within the financial markets, recording $868 million in the first quarter (Q1) of 2022, according to the Bank of Indonesia. Experts believe that adopting this LCS mechanism in international trade will help Egypt’s economic recovery.

Trading in Local Currencies

In September 2022, Russian Ambassador to Cairo Georgy Borisenko said that his country adopts a settlement mechanism using the local currency in trade exchange between Egypt and Russia, which includes a mutual acceptance of payments in the Egyptian pound or the Russian ruble in the two countries trade.

Moreover, India adopted a new foreign trade policy to trade in rupees with countries facing a shortage of dollars in order to "disaster-proof" them and to boost its exports,