The value of Egypt's currency plummeted to a record low against the US dollar on Wednesday as the country continues to battle surging inflation.
Decisions in recent months by the country’s Central Bank to raise the main interest rate and devalue the Egyptian pound have set off an economic shock that has affected millions of residents.
Hanan Ramsis, an economic analyst explains the effects of the event: “Today a complete floatation happened to the pound against the U.S. dollar and its (dollar) value increased today more than one time (during the day) reaching 30 pounds for one dollar, the effect of this on the Egyptian street is that the person who is saving and collecting dollars might start to relinquish the dollars and change it to Egyptian pound and this might balance the exchange rate.”
“This crisis will end when people who have been collecting dollars start to relinquish the dollars and change it to Egyptian pound and when the state manages to raise its foreign cash reserves to $45 billion. This would be a safety valve and the dollar will return to its original value and the exchange between the Egyptian pound and the dollar will get back to its previous level, " she added.
The measures were meant to fight increasing prices and meet the requirements of the International Monetary Fund for a bailout loan amid a shortage of foreign currency.
Last month, the Central Bank announced it aims to bring down inflation to about 7% by the fourth quarter of 2024, though it wasn’t clear how that would happen amid the current trends.
The higher inflation has inflicted heavy burdens on consumers, especially lower-income households.
Nearly 30% of Egyptians live in poverty, according to official figures.
The IMF approved the $3 billion support package for Egypt after a series of reforms, including the currency devaluation that saw the pound lose more than 40% of its value against the dollar since March 2022.