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Egypt signals no immediate plans for pound devaluation

NurPhoto/Emmanuele Contin
"I look forward to coordinating with Brics to achieve its goals in supporting economic cooperation," says President Abdel Fattah Al Sisi

Egyptian President Abdel Fattah Al Sisi appeared to rule out a further currency devaluation anytime soon in remarks made to a youth conference on Wednesday, saying such a move could harm national security and hurt Egyptian citizens.

Egypt has devalued the Egyptian pound by about 50 percent against the dollar since February 2022, when Russia’s invasion of Ukraine triggered an exodus of foreign investors from its treasury markets and a severe shortage of foreign currency.

It promised to allow supply and demand to determine the currency’s price as part of a $3 billion support package it signed with the International Monetary Fund in December.

The official exchange rate has remained fixed at about 30.90 pounds to the dollar for more than three months, while on the black market it has weakened to about 39 pounds to the dollar.

“We are flexible in the exchange rate, to be clear. But when the matter touches on Egypt’s national security, and the Egyptian people are lost? No. No, no, no,” Sisi said.

“I’m speaking seriously. I’m saying this on air. When the exchange rate has an effect on the lives of Egyptians, and could cause them to be lost, we won’t remain seated. We cannot,” he said to applause.

“Even if these words go against… yes. Even if these words go against…” he said without completing his sentence, but in an apparent reference to Egypt’s commitments to the IMF.

The IMF has yet to begin a review scheduled for March of Egypt’s progress in fulfilling the terms of the December agreement.

Despite three sharp devaluations since the Ukraine crisis broke out, foreign currency remains scarce, and many crucial imports such as factory and agricultural inputs have been held back from entering the country.