Egypt devalues currency by 48%

[MowCowWhoHow III]

Source: Middle East Monitor

The Egyptian Central Bank has announced that it has devalued the Egyptian pound by 48 per cent in an apparent effort to meet the demands of International Monetary Fund before a $12 billion is secured.

The move meant the currency reached 13 pounds to the dollar, up from nearly nine. A central bank auction of dollars was to be held today to allow supply and demand to determine the value of the pound.

Currency devaluation is one of the conditions laid out by the IMF for a requested $12-billion loan to Egypt.

Following Egypt’s 2011 popular uprising, which ended the 30-year rule of autocratic President Hosni Mubarak, the pound tumbled to 5.8 to the dollar.

Read more: https://www.middleeastmonitor.com/20161103-egypt-devalues-currency-by-48/

[forest444]

1. The International Misery Fund strikes again.

They know full well that a sudden devaluation of that magnitude is like a kick to the stomach for a developing economy.

Prices and interest rates will soar, hoarding and speculation will ensue, and after the dust settles most Egyptians will find themselves with thousands of shops out of business, a million fewer jobs or more, and 20-30% lower purchasing power. And that's a poor country to begin with.

I wonder what Lagarde's bosses will want Egypt to privatize...

[Warpy]

2. Countries that have done this have come out ahead

and the rough transition period has generally been shorter.

Imported goods are going to be a lot more expensive, but Egyptian goods are going to be cheaper and much more attractive overseas. Eventually the devaluation is going to spur everything from agriculture to both large and small scale industry and they'll be much better off.

This is sort of a "fuck you" to the IMF, which would rather countries keep their present rate of exchange and pursue austerity.

[raccoon]

3. Does that mean this would be a good time to take a trip to Egypt? nt

[Helen Borg]

4. How it must feel...

Suddenly to have your net worth halved like that.

[Igel]

5. How do you value "net worth"?

In dollars and only in dollars?

For the most part, this kind of devaluation hits the upper echelons more than the lower. Low-income folk tend to buy or receive more subsidized goods, use more domestic products, and focus on things like rent, transportation, and food. Higher-class folk will be buying more imported goods, and those will become more expensive.

If I were still in a book-collecting mood, I'd find a good online Arabic bookstore and stock up. Which would, of course, help their economy by "consuming" domestic-to-Egypt-produced goods.