Official exchange rate falls again, hitting LE7.93 to the dollar

The Central Bank of Egypt allowed the official exchange rate to drop by 10 piastres Sunday, bringing the Egyptian pound's value to LE7.93 to the US dollar at its interbank auction.

Banks are allowed to sell dollars for an additional 10 piastres, which puts the official retail value of the pound at LE8.03 to the US dollar.

After holding steady at LE7.73 to the dollar since July, the pound was also allowed to devalue by 10 piasters on Thursday, bringing the official exchange rate down to LE7.83 at the end of last week.

The pound has faced intense pressure as foreign reserves drop. In September, reserves fell to just US$16.3 billion, scarcely enough to cover three months' worth of imports.

And exports are also down. According to a report released last week by the Trade Ministry, exports for the first nine months of 2015 amounted to US$13.9 billion, a drop of 19.21 percent compared to the US$17.2 billion worth of exports in the same period in 2014.

Analysts have attributed the drop to energy shortages, currency shortages and the relatively high price of Egyptian goods due to the strong exchange rate.

Allowing the pound to drop against the dollar will make Egyptian goods cheaper on the global market place, but will also raise the price of imported goods on the local market. Egypt is already facing a rapidly rising cost of living, with annual consumer price inflation hitting 9.2 percent in September.