Egyptian pound weakens further after currency float

By Hussein Abdel-Fattah

CAIRO (AA) – The Egyptian pound weakened further on Monday, the second full business day since the government devalued the national currency.

The National Bank of Egypt, the country’s largest state-owned bank, was selling the dollar for 17.25 pounds and buying it for 16.25 pounds.

The Commercial International Bank (CIB), Egypt’s largest private bank, gave similar prices of selling and buying the dollar.

On Thursday, Egypt’s Central Bank floated the local currency in an effort to crush a booming black market for dollars.

The central bank, which is responsible for setting Egypt’s monetary policy, said that foreign currency prices will henceforth be determined by local market supply and demand.

Prior to the devaluation, the dollar’s official exchange rate was 8.8 pounds.

Currency devaluation is one of the conditions laid out by the IMF for a requested $12-billion loan to Egypt.

After decades of pegging the pound to the dollar at roughly 3.5, Egypt’s financial authorities in 2003 introduced a "managed float" policy, which saw the local currency gradually lose value against the greenback.

Following Egypt’s 2011 popular uprising, which ended the 30-year rule of autocratic President Hosni Mubarak, the pound tumbled to 5.8 to the dollar.

During the one-year rule of Mohamed Morsi, Egypt’s first democratically elected president who was ousted in a 2013 military coup, the currency fell further to some 7 pounds to the dollar.

Since then, the Egyptian pound has lost more than 100 percent of its value due to an acute shortage of hard currency in the local market.

Experts attribute the shortage to a dramatic decline in tourism revenue, foreign investment and exports in recent years, due primarily to the country’s ongoing political turmoil.