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An employee counts Egyptian pounds at a foreign exchange office in central Cairo, Egypt. /REUTERS
The Egyptian pound tumbled on Wednesday in its largest single-day slide since the cash-strapped government agreed to a 3 billion U.S. dollars International Monetary Fund deal in mid-December, authorities said.
The Egyptian pound fell from around 24.7 for one U.S. dollars to just over 26.3 against the dollar, some three weeks after Egypt and the IMF formally ratified the support package, approved in exchange for a number of economic reforms implemented by the country’s Central Bank, including a shift to a flexible exchange rate.
The package allows for a further 14 billion U.S. dollars in possible financing for Egypt.
Since the start of the year, the Egyptian pound has lost over 40% of its value against the dollar, with the country currently facing a foreign currency shortage.
In recent months, Egypt has also been beset by rising inflation, with the annual rate reaching above 18% in November. The Central Bank has sought to curb the rise by raising interest rates.
The National Bank of Egypt and Banque Misr — two of Egypt’s state-run banks — announced they were offering yield saving certificates with 25% interest rates, a move experts believe is another attempt to rein in inflation.
Most Egyptians rely on the government subsidies to afford basic goods such as bread, policies that have been in place for decades. Almost a third of Egypt's 104 million people live in poverty, according to government figures.
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Disinformation report hotline: 010-85061466