The Egyptian government resumed the liberalization of exchange rates by abolishing the customs dollar, amid expectations of higher prices in the short term due to the increase of the cost of importing goods and production components.
Analysts expressed their fear that the pound could fall significantly against the dollar, but others say the decision puts all sectors in front of supply and demand forces without false prices, to prove their ability to survive and compete on a sustainable basis.
The Ministry of Finance announced the abolition of the customs dollar rate, which has been set monthly since the pound's exchange rate was liberalized in November 2016, and that it will operate at the exchange rate set by the central bank on a daily basis.
According to Egyptian economic analysts, the impact of the decision will not be significant as long as the dollar against the pound stabilized at the current levels.
Concerns are that the pound may fall dramatically and inflation will rise, as well as the possibility of uncontrolled market practices, that is, exploiting the term “liberalization of the dollar” in unjustified price increases by traders.
Cairo had partially eliminated the dollar in December except for basic and strategic commodities, keeping the dollar at 16 pounds before its final cancellation and applying the central bank rate on all imported goods without any exceptions.
Source (Al-Arab - London Newspaper, Edited)
