Egyptian pound hits new, unprecedented low

Egyptian pound hits new, unprecedented low
3 min read
12 October, 2016
The value of the Egyptian pound against the dollar has reached an unprecedented rate of 15 pounds in the black market as the country struggles with a worsening currency crisis.
The exchange rate of the US dollar in Egypt has reached 15 pounds [Getty]

The exchange rate of the US dollar in Egypt has reached 15 pounds per dollar in the black market, hitting a new low amid a worsening currency crisis.

"The exchange rate increased from 14.35 on Monday to 14.75 on Tuesday afternoon," Fathi Saad, a member of the importers department in Cairo's Chamber of Commerce, told The New Arab.

"As the Bank kept the official exchange rate at 8.88, the price on the black market continued to rise on Tuesday, exceeding 15 pounds for the first time ever."

He added that importers in Egypt had to accept these rates to avoid more losses due to delayed shipments in the country’s seaports.

Egypt, which depends heavily on imports, is facing a foreign currency crisis and is under increasing pressure to devalue the pound, which the central bank has kept steady at 8.88 pounds to the dollar since March, when Egypt devalued the pound by 13 percent in the biggest one-time devaluation since 2003.

However, the move has failed to boost dollar liquidity or close the gap between the official and parallel rates.

The foreign currency crisis has made it harder for companies to operate in the country and forced many to resort to the black market for their dollar needs.

Last month, KLM Royal Dutch Airlines announced it would temporarily suspend flights to and from Cairo starting 8 January 2017 due to economic reasons.

"The devaluation of the Egyptian pound and the decision of the Central Bank of Egypt to impose restrictions on the transfer of foreign currency out of Egypt have a negative impact on results of KLM," the airliner explained in a statement at the time.

As the Bank kept the official exchange rate at 8.88, the price on the black market continued to rise on Tuesday, exceeding 15 pounds for the first time ever.
- Fathi Saad

On Sunday, an Egyptian official in the presidential palace told The New Arab correspondent that Egyptian President Abdel Fattah al-Sisi had reportedly ordered a halt to fresh construction of the country's new administrative capital due to a "lack of funding".

The country's net foreign reserves stood at $16.564 billion at the end of August, before jumping to $19.592 billion at the end of September after the central bank pumped $3 billion.

This left the country with a deficit of nearly half the $36 billion held in 2011 before an uprising drove away tourists and foreign investors, major sources of foreign currency.

In August, Egypt reached a preliminary agreement with the International Monetary Fund for a $12 billion three-year lending programme that could boost its reserves and plug its funding gap, but the deal requires Egypt to secure $6 billion in bilateral financing.

The following month, Egypt received the first $1 billion tranche of a $3 billion three-year loan from the World Bank aimed at supporting the government's reform programme.