Egypt's Flexable Exchange Rate Coming Soon Could be a Serious Financial Opportunity, Or Not.
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According to the election authority, an Egyptian presidential election will take place on December 10-12, and the winner will be announced by December 18. Former army chief Abdel Fattah al-Sisi has been president of the Arab world's most populous country for nearly a decade.
Experts predicted that Sisi would move the 2024 election forward ahead of a possible switch to a flexible exchange rate that could exacerbate social tensions.
After leading the ouster of elected Islamist president Mohamed Morsi in 2014, Sisi won a landslide against one of his allies in 2018.
Walid Hassan Hamza, chairman of Egypt's National Election Authority, said candidates can apply from October. The list of candidates is expected to be finalized by November 9.
Egypt's currency has lost half its value since March 2022, and inflation reached an all-time high in August of 39.7 percent. The government has kept the exchange rate pegged since early this year.
The Central Bank of Egypt is considering implementing a flexible exchange rate policy by the end of 2023. The currency has done nothing but decrease against the USD since early 2023. To learn more about the flexible exchange rate, go here.
BARD's Research on Currency Floats in the Past - Information Checked and is Correct
The last time a currency float created massive profits was in 2015, when the Chinese government floated the yuan. This decision led to a sharp depreciation of the yuan against the US dollar, which made Chinese exports more competitive and boosted profits for Chinese exporters.
In the months leading up to the float, the Chinese government had been under increasing pressure to allow the yuan to appreciate. The yuan had been pegged to the US dollar for over a decade, and many economists argued that it was undervalued. This was causing a number of problems, including a trade surplus for China and a trade deficit for the US.
On August 11, 2015, the Chinese government announced it would move to a more market-based exchange rate system. This meant that the yuan would no longer be pegged to the US dollar, and its value would be determined by supply and demand in the foreign exchange market.
The float led to a sharp depreciation of the yuan against the US dollar. The yuan fell by over 10% in the months following the float. This made Chinese exports more competitive and boosted profits for Chinese exporters.
The yuan float also had a significant impact on the global economy. The depreciation of the yuan led to a decline in global commodity prices, as many commodities are priced in US dollars. This hurt commodity-exporting countries, such as Australia and Canada.
Overall, the Chinese yuan float was a major event that significantly impacted the global economy. It created massive profits for Chinese exporters and hurt commodity-exporting countries.
Other notable examples of currency floats that created massive profits include:
- The float of the British pound in 1972
- The float of the Mexican peso in 1994
- The float of the Russian ruble in 1998
It is important to note that currency floats can also create significant losses. For example, the float of the Thai baht in 1997 led to the Asian financial crisis.
Currency floats are a complex topic; there is no guarantee that they will always lead to profits. However, they can be a powerful tool for governments to manage their economies.
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The Associated Press
