The Egyptian pound fell to a record low this week as Cairo brought in a new exchange rate regime. This came despite a decisive victory for President Muhammad Mursi in December’s constitutional referendum. The Egyptian currency slid to a record low of E£6.39 to the dollar on 3 January (leaving E£1 worth 15.6 US cents – see graph). This came as the Egyptian government on 30 December introduced a new system of foreign currency auctions leading banks to limit the availability of dollars. Prices for certain key imports have already risen stoking broader inflation fears. Egyptian inflation had fallen to an annual rate of 4.3% for November the lowest since 2006.
The move to foreign currency auctions came as Egypt’s foreign reserves have dwindled to $15bn. The central bank also introduced a ban on exports of more than $10,000 in cash. (CONTINUED - 832 WORDS)