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The Egyptian pound.. How did its journey start and why has its worth decreased through the years? | Financial system


Cairo- The Egyptian paper pound was born as a younger big competing with the world’s most well-known and highly effective currencies, however after an extended journey of greater than 123 years, it has fallen sharply, shedding its luster and energy.

Whereas the Egyptian pound was greater than the British pound and was equal to five US {dollars}, its worth continued to fall till the greenback alternate price exceeded 18 Egyptian kilos, then how did the Egyptian pound travel- did it begin and the way has its worth decreased through the years?

Starting of the journey

On June 25, 1898, Khedive Abbas Helmy II issued a “Decreto” (decree) granting Raphael Soares the best to determine the Nationwide Financial institution of Egypt and granting the financial institution the best to concern securities for a interval of fifty years who’re accepted to pay the princely funds, with the best to alternate these papers for gold.

The Nationwide Financial institution Regulation stipulated that the quilt of banknotes could be primarily based on half gold and the opposite half securities decided by the Egyptian authorities.

On January 5, 1899, the primary Egyptian pound was born, and the alternate price of the Egyptian paper pound in opposition to gold was mounted in order that the worth of 1 pound was equal to 7.43 grams of gold, and paper cash was not obligatory, nevertheless it was changeable to gold on demand.

With the outbreak of World Conflict I in 1914, a excessive order was issued by the ruler of Egypt on August 2, 1914 to cease the alternate of this forex into gold and undertake the official authorized tender of Egypt, linking it to the delivered. The authorized alternate price for the English pound was 97.5 Egyptian piastres (the Egyptian pound is the same as 100 piastres).

One hundred dollar bill on Egyptian pound banknotes background image 1 The price of the dollar has risen about 12% against the pound - correspondent photo
The Egyptian pound was greater than the pound sterling and was equal to five US {dollars} (Getty Photographs)

coin throne

Since its first day and for greater than 60 years, the Egyptian pound has been one of the vital useful currencies on the earth, and it was superior to the currencies of main international locations, together with the British pound and the US greenback, though its worth has assorted through the years as a result of nice political, navy and financial occasions that the world witnessed within the first half of the twentieth century.

The official hyperlink of the Egyptian pound to English forex till 1947, and for a number of years after that, performed a task in a few of the decline within the worth of the pound throughout this era, though it has maintained its place in opposition to the assorted currencies of the world, a very powerful of which is the greenback.

Alternate charges reported within the US Federal Reserve Bulletin because the Nineteen Twenties present that the Egyptian pound was probably the most useful forex in opposition to the US greenback amongst 39 completely different currencies that have been periodically included within the report.

Historic stations

The historic levels that the Egyptian pound has gone by means of since its adoption because the official state forex will be divided into a number of stations as follows:
Excellence From the start of the twentieth century till 1939, the Egyptian pound was price round 5 {dollars}, and this era noticed no decline within the alternate price of the Egyptian pound in opposition to the greenback besides for 3 years, beginning in 1931 after the devaluation of the British pound, adopted by the remainder of the currencies related to it.

The Egyptian pound alternate price fell in 1931 to $4.6, then fell to $3.6 in 1932, earlier than beginning to rise once more in 1933 after the USA determined to cut back the US greenback at 59.06% of its steel worth in March. 1933 to make the pound equal to $4.34.

And rapidly, the Egyptian pound got here again strongly the next yr 1934 to exceed 5 {dollars} (5.16 {dollars}), and through the next years it remained above the 5 greenback mark till it started to say no in 1939 with the beginning of World Conflict II.

restricted recoil

The Egyptian pound declined from the start of 1939 till reaching 4.32 {dollars} in September, the month of the Second World Conflict, and for 10 years the course of the pound stabilized round 4 {dollars}, earlier than falling by round 30 .5% in September 1949.

Two years earlier than that date, extra exactly in July 1947, Egypt severed its official financial hyperlink with the British pound and beforehand joined the Worldwide Financial Fund, and the worth of the Egyptian pound at the moment was equal to three.67 grams of pure gold, equal to 4.13 {dollars}.

Regardless of the disengagement of the English forex, the Egyptian pound stays affected by fluctuations within the pound sterling as a result of nearly all of its financial cowl continues to be made up of British bonds, so when the pound sterling depreciates in September 1949 by 30, 5% of its worth, the Egyptian pound adopted after solely 1 / 4 of an hour with the identical Worth falling to $2.87.

relative stability

Since that date, the US greenback grew to become roughly equal to round 0.35 kilos, a worth that held till 1961, earlier than the pound fell barely, to grow to be the worth of the greenback 0.4 kilos in 1962 then 0.43 kilos from 1963 to 1972, in response to information accessible within the Worldwide Forex Financial institution’s database for Egyptian forex.

The pound rose once more in 1973, when the worth of the greenback fell to 0.40 after which 0.39 till 1978. In 1979, the Egyptian forex misplaced nearly half of its worth with the adoption of the open coverage, bringing the worth of the greenback to 0.70. kilos, and the pound remained steady for 9 years earlier than its worth fell once more in 1989 when the worth of the greenback reached 0.87 kilos.

Retreat with out return

With the start of the 90s and the adoption of the “financial reform” coverage, the pound started to say no sharply, giving technique to the greenback to overhaul the Egyptian forex for the primary time in additional than 9 many years, and the worth The greenback reached 1.5 kilos in 1990, and the next yr the pound continued to fall and the greenback jumped to three.14 kilos and the decline continued. The value of the greenback stabilized at 3.39 kilos between 1994 and 1998.

The pound continued to fall progressively till the greenback broke the 4 pound barrier in 2002, then the choice got here to let the pound float fully in 2003, its worth fell and the typical price for the greenback reached 6 .28 kilos in 2004, earlier than falling barely and fluctuating up and down till the extent of 5.9 kilos to the greenback when the “revolution of 25 occurred.” January 2011.

After the revolution, the pound underwent additional levels of devaluation in opposition to the greenback, the worth of which rose to greater than 6 kilos, then exceeded 7 kilos, reaching 7.7 kilos in 2015 and eight.88 kilos in March 2016.

Between flotation and stability

On November 3, 2016, the Central Financial institution of Egypt determined to liberalize the alternate price of the pound (floating pound) in order that the greenback recorded the worth of 13 kilos, and the pound continued to fall in opposition to the greenback, which reached its highest worth on January 24, 2017, when the greenback reached 18.94 kilos, earlier than it started to say no progressively over the next years, till it reached 15.66 kilos on March 20, 2022.

On March 21, 2022, Egyptians woke as much as one other episode within the sequence of declines within the Egyptian pound in opposition to the US greenback, in what authorities stated was an try to beat the financial repercussions of the conflict in Ukraine.

The typical US greenback alternate price at Egyptian banks jumped to 18.26 kilos on the market and 18.17 kilos for buy, then rose to 18.55 on the market and 18.45 for buy the next day, earlier than falling again to 18.42 on the market and 18.32 for buy by the top of yesterday, Wednesday March twenty third / March.

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