One Month After The Biggest Currency Devaluation In 13 Years, Egypt Is Back To Square One

One month after Egypt sought to end a dollar squeeze with the biggest currency devaluation in 13 years, the country is back to square one. Money changers in North Africa’s biggest economy are selling hard currency at 11.47 Egyptian pounds, a record 29 percent premium to the official rate of 8.8 pounds per dollar, according to a Bloomberg survey on Wednesday of eight dealers who declined to be identified because their prices violate central bank rules. That surpassed the 24 percent gap that existed on the eve of Governor Tarek Amer’s devaluation decision on March 14, but had virtually vanished soon after.

The resurgence in unregulated trading is exerting pressure on Amer, who took the helm of the regulator in November, to follow through with a pledge of adopting a more flexible exchange rate. Four devaluations since the start of 2015 failed to quash the black market, a key supplier of foreign exchange for companies unable to meet their needs at banks. Traders of forward-rate agreements are predicting a 17 percent depreciation in the next 12 months. Click here to read more on Egypt’s currency crisis.