Russia’s invasion of Ukraine has resulted in withdrawal of billions of dollars from Egypt’s treasury markets by international investors, causing the Egyptian pound to fall by 10.67 percent on Monday.
According to Refinitiv statistics, the pound fell to 17.42-17.52 against the dollar, after trading at approximately 15.7 pounds to the dollar since November 2020.
In a surprise monetary policy meeting earlier on Monday, the country’s central bank raised overnight interest rates by 100 basis points.
Egypt has been in talks with the International Monetary Fund about possible assistance, according to sources close to the negotiations, although no formal request has been made.
Importers were unable to secure the dollars required for letters of credit, causing products to be stranded at Egyptian ports, bankers informed.
Egypt is experiencing greater prices for its significant wheat import demands, as well as a loss in tourism earnings from Russian and Ukrainian visitors to Red Sea resorts, as a result of the conflict in Ukraine.
Egypt’s biggest wheat suppliers are Russia and Ukraine.
According to a statement from Prime Minister Moustafa Madbouly’s office, Egypt fixed the price of unsubsidized bread at 11.5 Egyptian pounds ($0.66) per kilogramme on Monday.
On Monday, the state-owned Banque Misr announced the availability of 18 percent-yielding certificates of deposit.
Since Russian forces entered Ukraine, foreign investors have pulled billions of dollars from Egypt’s money market.
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