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The Egyptian pound fell Wednesday in its biggest one-day drop since the cash-strapped government agreed to a $3 billion International Monetary Fund deal in mid-December, officials said.
The pound fell from around 24.7 to 26.3 to the dollar. It comes about three weeks after Egypt and her IMF formally ratified the aid package. Transition to floating exchange rates.
The package will enable an additional $14 billion in loans to Egypt.
Egypt’s economy has been hit hard by years of government austerity, the coronavirus pandemic and the aftermath of the civil war in Ukraine. Egypt is the world’s largest importer of wheat, with most of its imports traditionally coming from Eastern Europe.
The Egyptian pound has lost more than 60% of its value against the dollar since early 2022, and the country is now facing a currency shortage.
Egypt has also been plagued by rising inflation in recent months, with the annual rate surpassing 18% in November. Central banks have tried to slow the rise by raising interest rates.
The National Bank of Egypt and Bank Misl – two of Egypt’s state-owned banks – have announced that they will offer high-yield securities at an interest rate of 25%.
Most Egyptians rely on government subsidies to buy basic commodities such as bread, a policy that has been in place for decades. Almost a third of Egypt’s 104 million people live in poverty, according to government statistics.
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