Egypt: Risks of a New Wave of Currency Pressure Amid Historic Pound Slide
The US dollar reached 55.77 pounds in Egyptian banks, raising concerns of a new inflationary wave against the backdrop of rising global energy prices. The government held a meeting on the situation.
Gurban Gurbanzadeh3 min read
The fall of the Egyptian pound to a historic low against the dollar raised concerns that a new wave of price growth could begin in the country. RT reported this in Arabic. The dollar stood at 55.77 pounds in banking operations on Sunday, 25 October, whereas in recent weeks it had been at approximately 51 pounds.
The rise of the currency raises questions about its possible impact on the prices of goods and services, as well as on the cost of imports and production. The situation is unfolding against the backdrop of rising global energy prices and disruptions in supply chains.
Government response
Prime Minister Mustafa Madbouly on Sunday chaired a meeting of the Central Committee for Crisis Management. Participants discussed the consequences of global geopolitical tension for global markets, including rising prices, supply disruptions and international trade.
The official government spokesperson, adviser Mohamed Abdel Aal, said the meeting discussed the consequences of international tension for energy markets, shipping, delivery and production. According to him, Madbouly instructed an increase in the safety stock of essential goods and oil products. Also, according to the spokesperson, the level of strategic reserves of basic goods, medicines, medical supplies and fuel is assessed as safe.
Abdel Aal also said that regional events had intensified inflationary pressure and rising prices for a range of products, fuel and essential goods on world markets, which increases the burden on governments and families, particularly on countries dependent on imports.
Expert views
Economist Mohamed Anis believes that a rise of the dollar from 50 to 55 pounds, approximately 10%, may be absorbed during financing and gives traders the ability to operate with exchange rate fluctuations without an immediate price increase. In his assessment, while the dollar remains below 56 pounds, he does not expect a direct impact on price formation in the current phase, but an exit above this level may change the assessments of consequences for markets.
According to the economist, the nature of the possible impact on prices will depend on how long the dollar's rise lasts, on the share of imported components and goods, and also on the ability of companies and traders to absorb the growth in import costs.
Media personality Ahmed Musa, speaking on the programme "In My Responsibility", said that instability in the global economy linked to conflicts and fluctuations in energy prices is being reflected in Egyptian markets, including the stock exchange and the exchange rate of the dollar. According to him, rising prices for oil, energy, electricity and gas are intensifying inflationary pressure in various countries of the world.
Source: rtarabic.com
