Egypt Pound Can Attain ‘Fair Value’ in 6 Months, El-Sisi SaysBy and
Current reforms and cooperation of population key to stability
Pound lost more than half its value against dollar after float
The Egyptian pound can attain its “fair value” in about six months, President Abdel-Fattah El-Sisi said, trying to reassure his anxious nation that a price surge since the abandonment of currency controls is temporary.
In a new sign of support for the central bank’s Nov. 3 decision to free the exchange rate, El-Sisi said the currency was weaker than it should be, but should strengthen as reforms take hold. The interview, his first with the state-run media this year, comes as rising prices exact a new toll on a country whose economy has been struggle to revive since the 2011 uprising that ousted President Hosni Mubarak.
“The current price is not the fair price, but we can, through the measures we’re taking and through population’s cooperation, reach a fair value in six months when the exchange market stabilizes,” he said. If that happens, “it will be reflected in the price of goods and the pressure on the people will ease.”
Core inflation, the measure used by the central bank that strips out volatile goods, climbed the fastest in almost 12 years in December, reaching almost 26 percent. El-Sisi and other officials have blamed unscrupulous merchants, in part, for the price hikes, which have deepened the hardship in a country where about half the people live around or below the poverty line.
In tandem with the free float, which has caused the pound to lose more than half its value against the dollar, the government also raised benchmark interest rates 300 basis points and sharply increased fuel prices.
The November reforms allowed the government to finalize a $12 billion International Monetary Fund loan deal that it sees as key to shoring up investor confidence and attracting new funds into the country. The government is about to test the international bond market again, with a planned roadshow this week to market between $2 billion and $2.5 billion in Eurobonds.