The liquidity of foreign currency has declined rapidly in Egypt since 2011 and this is coupled with a growing rationing of foreign currency and
the development of the black market. Additionally, there has been a rapid increase
in the external debt and the Central Bank has
found it necessary to devalue the currency.
Assess the effects of the currency depreciation
on the Egyptian economy in terms of trade balance, inflationary pressures, FDI and credit
rating. Use literature and data on Egypt.
THE POINTS THAT SHOULD BE COVERED IN THIS TOPIC:
1) what is the difference between depreciation and devaluation, what are the different exchange rate regimes and which exchange rate regime does Egypt follow from 2001 till 2016?
2) After the dirty floating that happened in year 2003 and after depreciating the currency in 2011 till 2016 how this affected the net exports and how this affected our revenues from Suez Canal and tourism which are the 2 sources of foreign currency. what also happened to the foreign direct investments and the prices?
3) In the analytical part, data about the price of the Egyptian pound vis a vis the dollar from year 2006 till 2016 should be shown. show the percentage of the devaluation and declination that occurred. Then correlate inflation and devaluation in a table to theoretically show what happened in the prices.
4) Possible policy recommendations and show whether there is a hope for the country to overcome these circumstances or not?
