Emmanuel OchayiIn a bid to alleviate Egypt’s ongoing economic woes, the governments of Egypt and the United Arab Emirates (UAE) have joined forces, sealing a currency swap deal worth approximately $1.4 billion.
This groundbreaking agreement, as reported by Bloomberg, permits the central banks of both nations to exchange their local currencies, up to 5 billion dirhams and 42 billion Egyptian pounds.
The Egyptian economy has been grappling with its most severe foreign currency shortage in years. Since early 2022, the North African country has devalued its currency three times, resulting in a nearly 50% depreciation against the US dollar.
The International Monetary Fund (IMF) has urged Egyptian authorities to embrace greater currency flexibility before considering further assistance within a $3 billion rescue program.
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Ziad Daoud, a Bloomberg Economist, commented on the situation, saying, “With inflation already at a record high, Egypt is unlikely to devalue the currency before the presidential election in December. But the country doesn’t have the means to sustain the status quo for much longer. After the vote, authorities will either let the pound weaken or impose draconian import restrictions.”
Furthermore, Egypt is strengthening its financial ties across the African continent. Notably, the Central Bank of Egypt recently signed a FinTech collaboration agreement with the Central Bank of Nigeria (CBN). This Memorandum of Understanding (MoU), as reported by Nairametrics, is set to foster the exchange of expertise in fintech, innovation, e-payment solutions, and financial inclusion.
The agreement was officially inked during the “Seamless North Africa 2023” conference at the Egypt International Exhibition Center in New Cairo, Egypt. Mrs. Aishah Ahmad, the Deputy Governor of CBN, expressed her optimism, stating, “We look forward to cultivating an innovative space for fintech startups and entrepreneurs in Egypt and Nigeria to accelerate financial inclusion, deepen our payment systems, and drive economic growth across the African Continent.”
This strategic partnership between Egypt and Nigeria marks a significant step towards economic rejuvenation and technological advancement on the African continent.
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