Egypt Independent

Egypt pound hits 5.8 to the dollar; food prices inch upwards



Food prices were subject to several incremental increases this year due to a corresponding rise in the value of the US dollar vis-a-vis the Egyptian pound, since Egypt largely relies on food imports to meet local market demand.

On Thursday, the dollar hit LE5.8, representing an LE0.33 increase in value since January of this year, when it stood at LE5.47.

“Many countries have decreased exchange rates for their respective currencies so as to encourage exports following the global financial crisis," said accountant Emad Gamal Eddin.

“The rising value of the dollar has served to inflate Egypt's trade deficit,” he added, which, he pointed out, had jumped from LE8.8 billion in 2009 to LE11.2 billion as of September 2010.

“Imports increased by some LE4.6 billion in the same period, while exports only rose by LE2.2 billion,” Gamal Eddin noted.

Egypt's Commercial International Bank had expected the dollar to reach LE5.73 in the final quarter of 2010, marking the Egyptian pound's lowest value against the greenback since 2005.

“The dollar has been rising steadily for a month and a half,” said Ali Hariri, head of currency exchange at the Egyptian Federation of Chambers of Commerce. “This is due to increased imports, especially after the central bank reduced import insurance fees by 50 percent to allow for the import of strategic commodities such as sugar.”

Translated from the Arabic Edition.