Businesses, because of the plunge in the Egyptian pound’s value, have been forced to spend more on imports. However, because most Egyptians are cash strapped and unable to pay more, its prices have not jumped in accordance to expenses.
The drop in value of the Egyptian pound to new record lows against the U.S. dollar recently has caused another round of hardship for consumers as well as businesses that are still struggling to come out of the economic devastation caused by the 2011 revolution that ousted former President Hosni Mubarak.
Businesses have reported that prices have soared from everything including vegetables to vitamins and from industrial goods to iPads, which has stirred the fears of the public and created more worry of political instability.
The Egyptian pound has held steady at about six for every U.S. dollar, however this week it dropped precipitously to 6.6, the drop in value precipitated the decision by Egypt’s Central Bank to auction off reserves of dollars to help fill in gaps in the budget, that has created even more economic gloom in the region’s largest Arab nation.
Experts are predicting that the currency will fall even further if the new elite politically manage to cut a deal that has been long-awaited with the International Monetary Fund that would inject new foreign currency into the reserves and pave the way for more aid agencies. One analyst has projected that the pound could fall to as low as 7.5 against the U.S. dollar before the end of 2013.
Prices have not increased enough to cause protesting in the streets and prices that have been state mandated for certain items might help control social unrest.