The country's currency plummeted by 40%!

Sina Financial News On March 6, local time, Egypt’s currency, the Egyptian pound, suddenly collapsed, and the exchange rate of the Egyptian pound against the US dollar plummeted by nearly 40%, once falling to 50.55 Egyptian pounds per US dollar, a record low. On the news side, the Central Bank of Egypt announced at an extraordinary meeting that the liberalization of exchange rate controls will allow market forces to determine the foreign exchange rate. At the same time, the central bank of Egypt announced a “violent interest rate hike”, raising the key interest rate by 600 basis points to 27.25%, hoping to alleviate the country’s severe foreign exchange shortage and obtain billions of dollars in new loans from the International Monetary Fund. At present, the Egyptian pound has joined the “five major currency crash clubs in the world”, and the main reasons for the collapse are roughly the same: hyperinflation, high debt, and an extreme shortage of foreign exchange. According to a report by BMI Research, a subsidiary of Fitch Solutions, the average inflation rate in Egypt is expected to be as high as 34.1% in 2023. In addition, Egypt’s debt crisis is also imminent, and Egypt should repay a total of 71.57 billion US dollars (about 515.2 billion yuan) of foreign debt from 2024 to 2026.