Egypt pound tumbles on black market as Saudi suspends aid
Egypt’s pound has tumbled more than 10 percent to unprecedented lows in the past week after a sudden suspension of Saudi oil aid raised fears of a deeper political rift that could sever the government’s much-needed financial lifeline. Black market traders said they sold dollars at 15 pounds on Tuesday, down from 14.20-14.25 a week earlier. But several importers told Reuters yesterday they paid 15.20 to 15.68 to secure dollars amid an acute shortage and plummeting confidence.
The steep depreciation means the gap with the official rate of 8.8 pounds per dollar has widened, increasing pressure on Egypt to devalue its currency and end uncertainty that has discouraged foreign investment. Egypt has struggled to earn dollars since a 2011 revolt drove away tourists and foreign investors. Its efforts to defend the pound drained reserves from $36 billion before the uprising to $19.6 billion at the end of September. Egypt has averted crisis largely thanks to billions of dollars in aid from Gulf Arab allies including Saudi Arabia since mid2013, when the army overthrew the Muslim Brotherhood, a common enemy. — Reuters