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.
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.
But as with much of post-revolution Egypt, decision-making remains opaque and swift action is not forthcoming. It is unclear if President Mohammed Morsi possesses the authority to appoint a finance minister, let alone formulate a coherent economic policy.
This week, the new president met with the Egypt’s Central Bank governor on two separate occasions (Sunday, July 1 and Tuesday, July 3) to check on the health of the Central Bank and the banking system, according to a spokesperson.
