Egypt pound reaches record lows amid a dollar shortage

The Egyptian pound has dropped to record lows on the black market in the past week, hovering between 9 and 9.25 per dollar, as importers struggle to find dollars for their operations and pressure mounts on the central bank to devalue the pound.

Several local newspapers this week reported that the central bank had directed local banks to prioritize giving dollars to pharmaceutical companies to import medicine and supplies.

“They have been delayed for a while, like everyone else is, but they definitely should have the priority,” said Hany Farahat, a senior economist at CI Capital in Egypt.

Net international reserves have remained around $16.5 billion in recent months, having declined from $36 billion in December 2010, a month before the 2011 uprising that toppled longtime autocrat Hosni Mubarak.

Central bank Governor Tarek Amer said late on Sunday the bank would only consider floating the pound once the country shores up its foreign currency reserves to $25 billion or $30 billion.

Amer said in a televised interview with the prominent TV commentator Ibrahim Eissa that the bank is mindful of the inflationary effects for ordinary Egyptians if they float the pound, as the country depends on imports for many consumer goods.