The Egyptian pound sees its biggest one-day drop since the IMF deal

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CAIRO — The Egyptian pound fell on Wednesday in its biggest one-day slide since the cash-strapped government agreed to a $3 billion International Monetary Fund deal in mid-December, authorities said.

The pound fell from around 24.7 per $1 to just over 26.3 against the dollar, about three weeks after Egypt and the IMF formally ratified the aid package, which was agreed in exchange for a number of reforms economic measures implemented by the country’s Central Bank, including a move to a flexible exchange rate.

The package allows for an additional $14 billion in potential financing for Egypt.

Egypt’s economy has been hit hard by years of government austerity, the coronavirus pandemic, and the fallout from the war in Ukraine. Egypt is the largest importer of wheat in the world, with the majority of imports traditionally coming from Eastern Europe.

Since the beginning of 2022, the Egyptian pound has lost more than 60% of its value against the dollar, with the country currently facing a shortage of foreign currency.

In recent months, Egypt has also been subject to rising inflation, with the annual rate reaching over 18% in November. The Central Bank has tried to curb the rise by raising interest rates.

The National Bank of Egypt and Banque Misr – two of Egypt’s state-owned banks – announced they were offering savings certificates with 25% interest rates, a move experts believe is another attempt to stop put on inflation.

Most Egyptians rely on government subsidies to pay for basic goods such as bread, policies that have been in place for decades. Nearly a third of Egypt’s 104 million people live in poverty, according to government figures.

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This story has been corrected to show that the Egyptian pound has lost more than 60% of its value against the dollar since the start of 2022, not this year.

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