Head of the Federation of Egyptian Industries (FEI) Mohamed El-Sewedy said the action taken by Central Bank of Egypt (CBE) to raise the value of EGP against the dollar by EGP 0.20, will contribute in paying-off importers’ bills.
The CBE devaluated the dollar to EGP 7.83 instead of EGP 8.03 in the formal market on Wednesday.
El-Sewedy added that the increase will improve the Egyptian imports’ image to the outside suppliers and give the impression of price stability for a longer period. In addition, it supports investment and consumer protection from increased prices due to higher import values.
On business and investment, El-Sewedy said this ensures that manufacturers will have the raw materials needed to run their factories.
El-Sewedy told Daily News Egypt that the CBE provided $1bn out of a total of $4bn to meet the requests for foreign currency in import contracts, which will have a great effect on industry stability.
Former head of the Textile Export Council, Magdi Tolba, said the measures taken by the CBE are not enough and the issue is not a matter of increasing the pound’s value against the dollar, but a matter of providing hard currency.
Tolba added that the pound’s value increase will not lead to a great decrease in import bills because there is a decrease in exports, as well as local and industrial production.
“The increase will affect exports badly, because Egyptian exports are already declining and their competitiveness is declining between other exporting countries,” said Tolba.
“Moreover, the increase affects the tourism sector as it also suffers from a decline, especially after the recent incidents, because tourists search for the cheap countries with low currency.”
Tolba noted that the EGP value increase may have negative effects on foreign direct investments (FDIs), adding that foreign investors search for countries with currencies less valuable than the dollar to maximise profits. Besides, the fluctuations in the currency worry investors.
He pointed out that reforming the business climate cannot be undertaken with a single decision, but other procedures are required to develop the Egyptian industry and develop the trade balance.
Tolba expressed hopes that the increase in the value of the Egyptian pound will contribute to provide raw materials at reasonable prices, to alleviate the burden on consumers.
Mustafa Al-Ashry, head of the household appliances division at the Chamber of Engineering Industries, said the prices of raw materials are abnormally high, noting that factories will close due to lack of materials.
