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Paralysis hits Egypt market

February 4, 2023 at 11:30 am

An Egyptian man arranges fruits at a shop in a market in Cairo. [KHALED DESOUKI/AFP via Getty Images]

Buying and selling in the Egyptian market have halted with the depreciation of the Egyptian pound against the US dollar. On Friday, the exchange rate against the dollar reached 30.2174 Egyptian pounds for purchase and 30.3129 for sale, according to the Central Bank of Egypt.

The prices of goods are rising in the market, including dairy, meat, iron, cement, medicine, factory supplies, spare parts and cars.

Prices are rising daily, while officials claim this is temporary. However, the high prices are pushing citizens to reduce their purchases, keeping them to a minimum. This is evident in the large number of special offers and sales announced by stores in malls and markets, real estate companies, supermarkets, tourism companies and bookstores. They have also been offering instalment plans and credit cards.

Finance and investment expert Wael Al-Nahhas confirms that there is a state of complete paralysis in the markets, and production has stopped. He told Al-Araby Al-Jadeed: “There is a decline in supply and a lull in demand because merchants fear that if they take the initiative and sell the goods they import or that are in their possession, the pound will deteriorate further, and they will not find anyone to give them dollars to import other alternatives.”

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Al-Nahhas added: “A state of complete paralysis prevails in the markets, and everyone is waiting for the bubble to burst, as happened with the price bubble that began to appear in the real estate sector. It is evident in the volume of facilitations by developers and sellers, while there’s been a sharp decline in demand.”

He expects violent reactions may occur in the markets as a result of suppliers’ continued demand for the dollar, with their renewed desire to import deals for the coming months after China’s markets reopened.

The finance and investment expert confirmed that the government was unable to control the dollar market, despite the extensive security moves, noting merchants collecting large amounts of hard currency in the parallel market without reinjecting it into the market. They are waiting for the outcome of the government’s actions regarding imports and selling public assets during the next stage.

On the other hand, the Head of the Foodstuffs, Grocery and Spices Division at the Alexandria Chamber of Commerce Hazem Al-Menoufy hopes that the continued provision of goods and customs release will lead to “providing goods and lowering prices.”

Over the past few days, Egyptian Prime Minister Mostafa Madbouly announced in his tours on the ground and at an economic conference that the country had overcome the crisis of goods accumulated in the ports, and the factories had returned to work at full capacity after they received a two-month stock of production needs. While the pound declines in banks, it raises inflation rates.

In this context, Head of the Importer’s Division at the Cairo Chamber of Commerce Imad Qinawi confirmed in a statement that the current crisis in prices and availability of goods is the result of the uncertainty of the future, and the lack of clarity of vision for both the producer and consumer. This creates a rush for commodities with limited quantity and puts their pricing out of the range of supply and demand.

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