- Title: For struggling Egyptians, devaluation promises price pain
- Date: 6th March 2024
- Summary: CAIRO, EGYPT (MARCH 6, 2024) (REUTERS) VARIOUS OF CENTRAL BANK OF EGYPT'S BUILDING PEOPLE WALKING BY VARIOUS OF EXTERIOR OF BANKS IN DOWNTOWN CAIRO INCLUDING NATIONAL BANK OF EGYPT AND BANQUE MISR VARIOUS OF PEOPLE WALKING (SOUNDBITE) (Arabic) EGYPTIAN CITIZEN, HOSSAMELDIN MANSOUR, SAYING: "In my opinion, this devaluation is a wrong decision in all cases, because the main problem is not about the devaluation, the main problem is that we need to find sources to bring dollars into Egypt, such as tourism, industry, exporting goods to bring dollars, we should encourage Egyptians abroad to bring their dollars here in Egypt. People are worried to bring their dollars here in Egypt. Suez Canal is not working properly. If we take loans, we need to repay it with interest. Today there is a devaluation, tomorrow we will do it again, because we don't have sources for dollars. We have to find sources for the dollars, this is my opinion." VARIOUS OF EXTERIORS OF BANKS VARIOUS OF TRAFFIC AND PEOPLE WALKING GIZA, EGYPT (MARCH 6, 2024) (REUTERS) (SOUNDBITE) (Arabic) EGYPTIAN WORKING IN REAL ESTATE, HAZEM NADA, SAYING: "As an average citizen living in this country, I'm very happy with this decision, because people used to set the prices (of goods) on the dollar's price at the black market, which reached 73 (Egyptian pounds to the dollar). Now the competition will lead them to use the rate which has now reached 49 or 50 (Egyptian pounds to the dollar). This makes me very happy, that prices will stabilise and there will be a sense of stability and that we do not go to the black market anymore." CAIRO, EGYPT (MARCH 6, 2024) (REUTERS) VARIOUS OF PEOPLE WALKING AND EXTERIOR OF BANKS VARIOUS OF A VEGETABLES MARKET, PEOPLE SHOPPING
- Embargoed: 20th March 2024 16:01
- Keywords: Devaluation Dollars Economy Egypt
- Location: CAIRO AND GIZA, EGYPT / INTERNET
- City: CAIRO AND GIZA, EGYPT / INTERNET
- Country: Egypt
- Topics: Budget/Taxation/Revenue,Middle East,Government/Politics
- Reuters ID: LVA001587606032024RP1
- Aspect Ratio: 16:9
- Story Text:Egypt's move to devalue the pound was met with frustration online and on the streets, with Egyptians complaining about everything from the cost of diapers to the price of chicken after years of struggling with low wages to afford them.
President Abdel Fattah al-Sisi let the Egyptian pound plunge in value in a bid to restore economic stability to the most populous Arab state with the help of billions of dollars of Gulf investment inflows.
However some Egyptians wonder whether such high-profile moves will provide relief for them after years of hardships.
“In my opinion, this devaluation is a wrong decision in all cases, because the main problem is not about the devaluation, the main problem is that we need to find sources to bring dollars into Egypt,” 70-year-old Egyptian, Hossameldin Mansour said.
“Today there is a devaluation, tomorrow we will do it again.”
Egypt's central bank said it had hiked interest rates by 600 basis points and would let the pound trade freely.
The bank said its actions were "backed by the steadfast support of multilateral and bilateral partners" and "sufficient funding has been secured to avail foreign exchange liquidity."
Egypt has in the past said it would move to a more flexible exchange rate, only to return to closely managing the currency whenever the pound weakened.
This time, it may be betting that hard currency inflows from investment projects including a $35 billion deal with the United Arab Emirates signed in late February will prevent a freefall.
The announcement on Feb. 23 that Emirati sovereign fund ADQ will invest $35 billion within two months in the development of a new city on Egypt's north coast and other projects eased pressure on the Egyptian pound on the black market.
Also on Wednesday, the International Monetary Fund (IMF) approved a much-awaited $8 billion dollar loan to Egypt, increased from $3 billion previously.
Egyptians have endured economic hardships for years while Sisi spent billions of dollars on a new capital city, bridges and other infrastructure.
The flagship project is a $58 billion New Administrative Capital rising in the desert east of Cairo, a site Sisi said would mark the birth of a new republic.
Many have seen living standards slide and struggled with steep price increases for everyday goods and services. An estimated 60% of the 106 million population is beneath or close to the poverty line. Prices for essential goods have soared.
As Egyptians endured hardships, Sisi told people to bear the economic pain and that his mega-projects would provide jobs.
Breaded chicken, popular among the middle class, was a major indicator of market stability. The rise in prices alarmed Egyptians.
It generated jokes on X shortly after the economic measures were announced.
"The dollar amounted to 50 pounds at banks and the world is in ruins. But his mother asks, will the price of breaded chicken fall or rise?" someone wrote.
Yet, some remained optimistic about the decision.
“This makes me happy, that the prices stabilise and there is a sense of stability and that we never go back to the black market,” Hazem Nada, who works in real estate, said.
(Production: Ahmed Fahmy, Sayed Sheasha, Mai Shams El-Din) - Copyright Holder: REUTERS
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