By Mohamed Khabisa
CAIRO (AA) – Egypt’s Central Bank on Thursday officially devalued the local currency from 8.85 Egyptian pounds to the dollar to roughly 13 Egyptian pounds to the U.S. greenback.
According to the central bank, which is responsible for setting Egypt’s monetary policy, foreign currency prices will henceforth be determined by local market supply and demand.
International Monetary Fund Director Christine Lagarde has repeatedly called on Egypt’s financial authorities to devalue the Egyptian pound — long considered overvalued — so as to qualify for a requested $12-billion IMF loan.
After decades of pegging the pound to U.S. currency at about 3.5 pounds to the dollar, Egypt’s financial authorities in 2003 introduced a “managed float” policy, which saw the local currency gradually decline in value.
Following Egypt’s 2011 popular uprising, which ended the 30-year rule of autocratic President Hosni Mubarak, the Egyptian pound tumbled to 5.8 to the dollar.
During the one-year rule of Mohamed Morsi, Egypt’s first democratically elected president (ousted in a 2013 military coup), the currency fell further to some 7 pounds to the dollar.
Since then, the Egyptian pound has continued to fall due to acute hard-currency shortages in the local market, along with recent declines in tourism, foreign investment and exports due largely to ongoing political turmoil.
By the end of October, the dollar was trading for as much as 18 pounds on Egypt’s black currency markets — the weakest exchange rate in the country’s history.
