Egypt Struggles With Skyrocketing Inflation and Depreciating Currency, While Bitcoin Nears Record High in the Country
According to the Egyptian Statistics Bureau, Egypt’s annual inflation rate hit 36.8% in June, a staggering 33.7% increase from May’s inflation rate, breaking records. Egypt, the world’s 14th most populous country, grapples with soaring prices for goods and services across the region. Additionally, the bitcoin exchange rate in Egypt is approaching the record high set in November 2021.
Egyptian Pound Plummets as Inflation Reaches Highest Level in Decades, Bitcoin Nears All-Time High
Recent inflation figures show Egypt is currently grappling with soaring inflation rates. The annual inflation rate surged to 36.8% in June. Citizens face rising food prices, a depreciating currency, higher fuel costs, and a growing fiscal deficit. Since June 2022, when the inflation rate was at 14.7%, the cost of goods and services in Egypt has more than doubled.
The Egyptian pound (EGP) has declined significantly against the U.S. dollar in the first half of 2023, according to the latest exchange rates. The EGP’s value has dropped 80.25% against the dollar since Dec. 26, 2003, with 42.09% of that decline occurring within the past five years. The currency has depreciated nearly 20% against the U.S. dollar since the start of 2023. Additionally, the inflation rate in Egypt has reached the highest level recorded since 1958.
In response to the inflation crisis, the Egyptian government has taken measures such as reducing state spending. Moreover, the Central Bank of Egypt increased the benchmark bank rate four times in 2022. Despite the significant rise in inflation in Egypt, the exchange rate of the Egyptian pound (EGP) against Bitcoin (BTC) indicates BTC is nearing a record high. The current exchange rate is nearing the all-time high set in November 2021, when BTC surpassed one million EGP per unit. As of July 10, 2023, the exchange rate is 936,506 EGP per Bitcoin.
Egypt’s ongoing currency crisis and rampant inflation have severely impacted its citizens. An Egyptian family told the Wall Street Journal in April they were “hardly surviving this crisis” and were running low on food. In order to mitigate the severe inflationary conditions, on January 16, 2023, the government announced a plan to sell discounted bread to low-income Egyptians most affected by the economic upheaval.
According to government statistics, nearly 30% of Egyptians live below the poverty line. Egyptian policymakers have also been seeking assistance from the International Monetary Fund (IMF) and the World Bank. Since 2016, Egypt has received multiple financial support packages from the IMF. The most recent of these, a $3 billion loan, was approved by the IMF in December 2022.
What are your thoughts on Egypt’s inflation crisis and its impact on the lives of its citizens? Share your thoughts and opinions about this subject in the comments section below.
