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Egypt Is Working Aggressively To Get Out From Under The Dollar's Chokehold

Derek Wolfe

Updated: October 28, 2022

egypt dollar
Editor’s Note:

EDITOR'S NOTE: Despite the Egyptian pound rising against most major currencies, it’s sinking rather badly against the US dollar. The problem goes far beyond this, though. Egypt is trying to get out from under the dollar’s hegemonic yoke (many countries are). Egypt does not want to be subjugated under the monetary benefits of kowtowing to the West, vulnerable to dollar-based sanctions should it step out of a place relegated to it by western nations. Instead, Egypt wants to de-dollarize aggressively, so its central bank is constructing a new index consisting of gold and other currencies. China and Russia already announced (a few months ago) that the BRICS nations have constructed their own international reserve currency. Saudi Arabia (a former chief ally of ours) has expressed interest in joining BRICS. Will Egypt be the next to follow, further disrupting the global economy from its current “unipolar” status in which the dollar is still “king”?

The Egyptian pound is performing poorly against the US dollar but faring better compared to other currencies.

The Central of Bank of Egypt is working on a new index consisting of gold and foreign currencies aside from the US dollar. The bank’s acting head, Hassan Abdalla, revealed the plan Sunday at an economic conference in the country, the state-owned Al-Ahram reported. 

What is it: Countries use indexes of foreign currencies to measure how their own currency is performing. The US dollar Index, for example, consists of the euro, Swiss franc, Japanese yen, Canadian dollar, British pound and Swedish krona. 

Why it matters: The Egyptian pound has decreased to historic lows against the dollar in recent weeks. Throughout the year, the currency has been stressed by the global economic storm. The pound is doing better against other currencies, however. It recently appreciated against the euro and British pound, Marc Espanol reported for Al-Monitor this month. 

 

In his remarks, Abdalla pointed out the pound’s relatively better performance against other currencies, according to Al-Ahram. This could be why Egypt is pursuing the new index. 

Know more: Egypt is experiencing a shortage of US dollars, which has led some banks to restrict dollar withdrawals recently. 

Originally published on AL-Monitor. 

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