Past devaluations

Gamal Essam El-Din , Thursday 14 Mar 2024

The Central Bank of Egypt’s landmark decision to float the Egyptian pound was the latest in a long history of devaluations.

Egyptian pound
Egyptian pound


On 6 March, the Central Bank of Egypt (CBE) took the long-awaited decision to float the pound. The move was among the conditions set by the International Monetary Fund (IMF) before it agreed to advance a new bailout loan of $8 billion.

A brief history of devaluations:

1960s: The Egyptian pound remained part of the sterling pound area until 1962 when the CBE decided for the first time to peg the currency to the US dollar at a rate of LE1 to $2.3. The rate was changed to LE1 to $ 2.5 in 1973.

January 1977: Under President Anwar Al-Sadat, the government adopted an open-door economic policy to replace the socialist-oriented policies of the 1960s. As a result, in January 1977, as part of a $375 million loan agreement with the IMF, the CBE devalued the Egyptian pound to LE2.5 against the dollar. The decision, which led to a dramatic rise in food prices, caused what came to be known as the food riots of 18-19 January 1977.

1989: Under President Hosni Mubarak and the government of Prime Minister Atef Sedki, the CBE opted to float the pound. Any move, however, was delayed until 2001, when the float was tightly managed, leaving foreign exchange controls essentially unchanged.

May 1991: The pound was devalued to reach LE 3.3 against the dollar. The decision followed the end of the first Gulf War when, as part of a new agreement with the IMF, 75 per cent of Egypts external debts were written off and the government agreed to implement a massive privatisation programme.

June 2003: Under Hosni Mubarak the government of Prime Minister Atef Ebeid, the pound was devalued to LE 5.5 to the dollar.

January 2011: As the 25th January Revolution erupted, the pound was being traded on the market at LE7 per dollar

November 2016: Prime Minister Sherif Ismail agreed to devalue the pound as part of a $12 billion loan agreement with the IMF. The pound lost 48 per cent of its value and by the end of November 2016 was trading at LE18.16 against the dollar.

21 March 2022: One month after the eruption of the Russia-Ukraine war the CBE devalued the Egyptian pound by 5 per cent. 

March–August 2022: The US dollar continued to be traded at an average of LE18.

2 August 2022: The US dollar strengthened against the Egyptian pound, recording an average of LE19.

September 2022: The dollar trading price started to surpass the levels registered in 2016 when Egypt adopted an IMF-backed economic reform programme with a loan of $12 billion.

Dollar rates ranged between LE19.2 and LE19.5 throughout the month.

16 October 2022: The IMF and the Egyptian authorities announced they reached a staff-level agreement for a new loan programme for Egypt worth $3 billion.

27 October 2022: The dollar rose to LE19.53, then to LE 24.17 as the Egyptian pound lost 14 per cent of its value.

November 2022: The dollar reached between LE24.18 and LE 24.55.

28 December 2022: The dollar continued to gain value against the Egyptian pound, reaching over LE 24.75.

January 2023: The pound declined from LE 24.63 to LE 30.8 a dollar, a 25 per cent fall in the currencys value.

6 March 2024: Faced with a hard currency crisis exacerbated by the war in Gaza, the CBE finally decided to scrap attempts to protect an official exchange rate and instead adopt a flexible regime based on supply and demand. Within a few days of the floatation, the pound settled to around LE 50.1 to the dollar. On Monday, before Al-Ahram Weekly went to press, the pound was trading at LE 49.10.

* A version of this article appears in print in the 14 March, 2024 edition of Al-Ahram Weekly

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