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Violence weighs on value of pound on black market - Daily News Egypt

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Violence weighs on value of pound on black market

Egyptian pound’s black market value falls on instability following dispersal of pro-Morsi sit-ins in 14 August.


By Doaa Farid

The value of the Egyptian pound against the US dollar in the black market has fallen after it had started to recover some of its previous losses. (DNE/ Winter Sorbeck)
The value of the Egyptian pound against the US dollar in the black market has fallen after it had started to recover some of its previous losses. (DNE/ Winter Sorbeck)

Amid spiraling violence triggered by the dispersal of sit-ins staged by supporters of ousted president Mohamed Morsi, the value of the Egyptian pound against the US dollar in the black market has fallen after it had started to recover some of its previous losses.

The price of the US dollar in the black market rose to reach EGP 7.20 compared to EGP 7.05 in July, said Gamal, an exchange office owner who asked for his full name not to be mentioned. He said this rise is due to the month-long curfew and a shift by companies toward exchanging their cash into dollars.

Gamal explained that the instability in the street raised concerns of a decline in the value of the Egyptian pound, which led to a higher purchase of dollars. “And because of the curfew, the hours of running business is limited so as the supply of dollars, that’s why the value of the dollar increased,” he said.

However, he added that, despite the decline, this still represents “stability” compared to the drop in the local currency’s value of the pound under Morsi’s government.

The 30 June nationwide protests which led to Morsi’s ouster year into his rule was followed by an immediate decline in the US dollar in the black market to reach EGP 7.05 compared to EGP 7.85 in April. This was attributed to positive expectations from the interim government and the influx of billions of dollars in the form of aid from several Arab Gulf states.

On the official front, the US dollar-to-Egyptian pound ratio has strengthened to EGP 6.98 at a Central Bank of Egypt foreign currency auction on Thursday after a drop it had witnessed following Morsi’s overthrow on 3 July, according to Reuters. The US dollar has depreciated against the local currency to reach EGP 6.99 after reports of the Gulf aid.

The net foreign currency reserves declined to reach $14.9bn in June compared to $36bn on the eve of the January 25 Revolution. In an attempt to curb a run on the pound, the central bank started hosting dollar auctions in December to halt the sale of foreign currency.

The Egyptian pound lost over 15% of its value against the dollar during Morsi’s year in office and the annual inflation rate has rose by 9.8% in June, the Central Agency for Public Mobilisation and Statistics reported.

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