On Monday, a member of the Grain Division of the Federation of Industries, Walid Diab, said that the price of a ton of wheat rose by 2,500 Egyptian pounds during the past two weeks to reach 14,500 Egyptian pounds. Diab attributed this to the Central Bank of Egypt’s lack of access to US dollars to release new shipments of wheat at the ports, which led to a shortage in the quantities offered in the local market. This would also have an impact on flour prices, he added.
Egypt, the world’s largest wheat importer, imports about 12 million tons of grain annually. According to Economy Plus, experts and international banks predicted that the Central Bank of Egypt will soon have to devalue the local currency due to mounting pressure on the Egyptian pound. According to Citigroup, the Egyptian government is dealing with an increased need for hard currency, which will only disappear if the local currency is more flexible. According to the investment banking company, foreign investors are willing to bet on another devaluation of the Egyptian pound. Goldman Sachs economist Farouk Sousse said that accelerating inflation pressures the local currency.
Head of Emerging Market Sovereign Debt at Abrdn, Edwin Gutierrez, also said Egypt would need to loosen its grip on the Egyptian pound sooner rather than later, adding that the local currency remains highly controlled by the government. He added that neither the International Monetary Fund (IMF) nor emerging market debt managers accept this control policy, and all factors point to a further depreciation of the Egyptian pound. The IMF has urged the Egyptian government to implement economic and monetary reforms, including the privatization of sizable state-owned businesses and the liberalization of the exchange rate for the local currency.