Egypt is facing a major credit crisis as its banks hold a national currency which is fast losing its value on international exchange markets.
Since the ousting of the old regime, violent protests, a soaring budget deficit and a starved tourist industry have resulted in a seeping away of confidence in the Egyptian pound.
And it is not only a problem of paying for imports – the Egyptian people are engaged in a daily battle to pay for the basic materials to live with a currency nobody wants.
An owner of a currency exchange centre said:
“Traders import from abroad and this increases the demand for the dollar, importers resort to collecting the dollar from the markets and this reduces the rate of the Egyptian currency.”
The government is grappling with the situation. It is seeking favourable easy payment terms for imports, hoping for an IMF loan and trying to stabilise the currency by restricting bank held foreign reserves. But it’s an up hill struggle.
One local trader complained that bankers say they have no dollars, but they do have them. “We would still buy them even of the dollar was worth ten pounds, because we don’t know the fate of the Egyptian pound,” he said.
Reporting for euronews in Cairo, Mohammed Shaikhibrahim said:
“Restoring confidence in the Egyptian national currency it closely dependent upon political stability, security, and the government’s package of reform measures. They include such things a market surveillance and import controls all so that the Egyptian pound can eventually recover.”