The Egyptian pound is declining against foreign currencies, nearing 50 per U.S. dollar following recent hikes in metro fares and fuel prices.
On Tuesday, the currency was valued at 49.16 per U.S. dollar, according to the Central Bank of Egypt. After fluctuating between 47 and 48 per dollar in June and July, the pound has lost approximately 60% of its value since its initial public offering in March, falling to around 30 per dollar.
This new exchange rate comes a week after the International Monetary Fund (IMF) completed its third review of Egypt’s financial situation, authorizing the release of $820 million as part of an $8 billion bailout package. This loan aims to support Egypt’s struggling economy, which faces challenges such as a foreign currency shortage, soaring inflation, and unrest in the Red Sea due to attacks by Yemen’s Houthi rebels.
The IMF noted last week that while inflation remains high, it is decreasing, and a flexible exchange rate is central to the country’s economic strategy.
Egyptians are dealing with significant inflation, with the oil ministry recently announcing a 10% increase in fuel prices. The last fuel price hike occurred in March, attributed to rising costs due to Red Sea attacks and the currency’s depreciation.
The Houthis have targeted commercial ships in the Red Sea in response to Israel’s actions in Gaza, impacting global trade routes. Oil, natural gas, and grain passing through these sea lanes are crucial to the Suez Canal, which handles 12% of world trade.
Additionally, Cairo Metro fares increased last week, now ranging from 2 to 5 Egyptian pounds, as reported by the National Tunnels Authority. This fare increase aligns with Egypt’s agreement with the IMF to double its bailout, which now totals $8 billion. The price adjustments are part of the conditions set by the IMF for continued financial aid.