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The value of the Egyptian currency plummeted to a record low against the US dollar on Wednesday as it continues to battle surging inflation.
The country’s central bank’s decision to raise key interest rates and devalue the Egyptian pound in recent months has triggered an economic shock that has affected millions of residents.
Economic analyst Hanan Ramsis explains the impact of the event: “Today there was a complete swing in the pound against the US dollar, and its (dollar) value rose more than once today (intraday), with the dollar reaching £30. The impact of this on the streets of Egypt is By saving and collecting dollars, they may start to abandon the dollar and change to the Egyptian pound, which could bring the exchange rate into equilibrium.”
“This crisis will end when the people who have been collecting dollars start to let go. When the dollar was changed to the Egyptian pound and the state was able to raise its foreign exchange reserves to $45 billionThis is a safety valve and the dollar will return to its original value and the Egyptian pound-dollar exchange will return to its previous levels,” she added.
The measure was intended to combat rising prices and meet the International Monetary Fund’s bailout loan requirements amid foreign currency shortages.
Last month, the central bank announced that it aims to bring inflation down to about 7% by the fourth quarter of 2024, but it is unclear how that will come about given current trends. There was not.
Rising inflation is putting a heavy strain on consumers, especially low-income households.
Nearly 30% of Egyptians live in poverty, according to official statistics.
The IMF has approved a $3 billion aid package for Egypt after a series of reforms, including a currency devaluation that has seen the pound lose more than 40% of its value against the dollar since March 2022.
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