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Egypt's Policy Makers Scramble To Avert Currency Collapse

Egypt's currency is headed toward devaluation, and could lose as much as 50% of its value in the coming months. Carina Kamel writes that the only question is whether the pound’s fall will be messy and chaotic, or if Egypt’s new leaders can get their act together quickly enough to keep the process managed and orderly.
A boy pushes a bicycle as he walks past a currency exchange office in Cairo September 18, 2011. Seven months after president Hosni Mubarak was ousted, Egypt's business community is becoming more vocal in its pleas for the interim government to spell out how it plans to revive confidence in the economy, which has been badly hit by an exodus of tourists and investors. Picture taken September 18, 2011. To match feature  EGYPT-BUSINESS/ REUTERS/Mohamed Abd El-Ghany  (EGYPT - Tags: BUSINESS)

Egypt’s central bank never discusses it publicly, but the Egyptian currency is headed toward devaluation in the coming months, whether policymakers like it or not. The only question is whether the pound’s loss of value will be messy and chaotic, or if Egypt’s new leaders can get their act together fast enough to keep the process managed and orderly.

With the country’s safety net of foreign reserves now barely large enough to cover the cost of three months of essential imports like fuel, the next few weeks will be crucial to staving off a crisis.

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