Egypt letting pound decline against dollar
The Egyptian authorities have allowed the pound to drop about five percent against the dollar over the past three months in order to ease a liquidity crisis, a financial services company said Thursday. The liquidity shortage, mainly in the dollar but also to a lesser extent the Egyptian pound, which is in principle pegged to the dollar, has been going on for more than a year.
The official exchange rate in the country's banks has gone from 3.44 Egyptian pounds to the dollar in April/May to the current EP 3.55 to the dollar, according to EFG-Hermes figures. But in private exchange bureaus, the rate has changed from 3.48 to 3.62.
An analyst unconnected with the firm and who asked not to be identified, said the currency had fallen seven percent over the past six months, from 3.40 pounds to the dollar to the current rate of 3.60. Meanwhile, an EFG-Hermes analyst said the pound's slide against the dollar will continue in the months to come.
The decline of the Egyptian currency, boosts exports, which rose to $1.1 billion in the first quarter of 2000 compared to $800 million in the first quarter of the previous year.
President Hosni Mubarak said at the end of April that the country was suffering from a liquidity crisis because of excessive spending on infrastructure projects, state banks' bad loans, a flight of capital and a lack of investment from abroad. - (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)