Country wide Egypt sale: currency devaluation of 48%

Country-wide Egypt sale: currency devaluation of 48%

CAIRO — Last week, Egypt took the unprecedented step of floating its currency, meeting key demands by the International Monetary Fund under a US$12 billion loan agreement to overhaul the ailing economy. The floatation, accompanied by a 48% devaluation of the Egyptian pound, will help tourists stretch their holiday money much, much further.

For the first time, Egypt’s currency will fluctuate according to supply and demand. El-Sissi has often asserted that tough times lie ahead as the country struggles with an array of economic woes, from double-digit inflation to unemployment and the imminent hike in fuel prices.

The banned Muslim Brotherhood group condemned the pound’s floatation, saying it would “crush the bones” of millions of Egyptians already struggling to make ends meet.

Last week’s devaluation moved the Egyptian pound at 13 to the dollar, down from 8.8 pounds on the official market. By the afternoon last Thursday, banks were selling the dollar at 14.30 pounds, and buying the U.S. currency for 13. This week the pound has sunk to almost 17.

The devaluation should provide a much needed boost to exports, including tourism. It makes holidays in Egypt even cheaper for inbound tourists, who have shied away from the country with the more difficult security situation.

Even with the improvements in affordability, Egypt tourism numbers are unlikely to recover to pre-revolution figures because of security concerns and government warnings about travel to the country.