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Egypt's Floating Currency Spur Foreign Investment Boost

  • 2018-10-04 17:19
  • 아시아뉴스통신=Ian Maclang 기자
Photo by: emi moriya via Flickr
 

Foreign investors acquired a net 11 billion Egyptian pounds ($615.90 million) worth of shares since Egypt allowed its currency to trade freely last November.


The central bank of Egypt took the dramatic step of floating the Egyptian pound last November to entice foreign investments after years of political instability that resulted in the depletion of the country's reserves. This protective measure was adopted to remove the advantage that the black market has gained from its activities that effectively devalued the currency from the banking system. According to Egyptian Central Bank Governor Tarek Amer, this brave step of allowing Egyptian currency to trade freely is a manifestation of a strong political will to reform the economy.


Foreign currency flows have also improved after Egypt signed a $12 billion loan program with the International Monetary Fund (IMF), which will span for three years. The program is primarily aimed at radical economic reforms, which involve an increase in energy prices as well as the imposition of value-added taxes. Another reform that Egypt is introducing is the reduction or removal of state subsidies on fuel to meet IMF conditions. At present, the Egyptian government has already imposed cuts on subsidies on household electricity consumption.


According to Stock Exchange Chairman Mohamed Omran, Egypt's stock exchange has acquired a total of 15 billion worth of Egyptian pounds in foreign investments since 2013. He also said that the stock exchange is expected to start trading bonds in the first quarter of next year.




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