Rabat- Egypt’s national currency depreciated against the US dollar by more than 13% losing half of its value since March 2022.
Qatari news outlet Al Jazeera reported that the exchange rate in state banks plummeted to 31.95 Egyptian pounds to the dollar before settling at 29.7 Egyptian pounds on Wednesday afternoon.
One of the reasons the Egyptian pound fell significantly this week was that the Central Bank allowed the exchange rate to move more freely, which was a key requirement from the International Monetary Fund loan.
In December 2022, The International Monetary Fund’s (IMF) executive board approved a US $3 billion financial support package for Egypt as the country continued to struggle with rising inflation and price increases.
The package includes a durable shift to a flexible exchange rate, said the IMF in its press release.
The Egyptian pound’s sharp decline is also attributed to the country’s economic situation, which has been severely impacted by the pandemic and the war in Ukraine.
Egypt’s economy was severely harmed after Russia invaded Ukraine last February, causing global investors to withdraw billions from the North African country, according to Al Jazeera.
The same source added that the war caused a sharp rise in wheat prices, which had a significant impact on Egypt, one of the biggest grain importers in the world, which resulted in increased pressure on its foreign exchange reserves.
Meanwhile, Egypt’s annual inflation increased to 21.9% in December from 19.2% in November.
In light of the soaring inflation, Egypt hiked interest rates by 300 basis points in December 2022, the most since 2016.
