Egypt: Investors face bankruptcy over currency float
Investors now pay back loans at increased cost due to new exchange rate.Some Egyptian investors have called on President Abdel-Fattah El-Sisi to intervene in the recent float of Egyptian pound in order to save local companies and industries from bankruptcy. The investors called for the president's swift intervention through an advertisement placed in Egypt's Al-Ahram newspaper last Tuesday. The newspaper advert was signed by nine investors' associations. According to the investors, the bankruptcy threat is caused by the floating of Egyptian currency as companies pay back loans at increased cost due to new exchange rate and the companies have sold their products using the old exchange rate. The group of investors which represent influential industrial zones in Egypt also warned that the currency float will prolong the dollar crisis faced by companies; reduce import which will lead to shortage of basic commodities and increase unemployment rate. The Egyptian Central Bank floated the pound on November 3, raising interest rates by 300 base points. Prior to this, Egypt's dollar peg had drained the nation's foreign reserves with low foreign investment due to political instability over the years.