The Egyptian Economy: The Plot Thickens

Source: The Moshe Dayan Center For Middle Eastern And African Studies
Author(s): Paul Rivlin

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In recent years, Egypt’s shortage of foreign currency has resulted in a lack of basic goods such as food and fuel. As the demand for foreign currency exceeded the supply on official markets, the premium on the parallel market rose and a dual system evolved. Currency devaluations in 2015 and early 2016 did not solve the problem.

In November 2016, the Central Bank of Egypt (CBE) devalued the Egyptian pound again, this time by 32.5 percent against the US dollar. Unlike previous occasions, the rate was then left to float without intervention from the central bank. The market was now to determine the rate of exchange, signifying a major change of policy. In the month following the devaluation, the value of the Egyptian pound fell further and the devaluation reached 50 percent….

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