"A situation of near-state of emergency": Egypt's currency has collapsed since the start of the war in the Middle East

The Egyptian pound hit a historic low on Sunday, March 8, trading at over 58 to 1 euro, as the most populous country in the region suffers the economic fallout from the conflict in the Middle East. The US-Israeli war against Iran has profoundly destabilized the global economy and international trade, notably with the blockade of the Strait of Hormuz, through which a fifth of the world's oil reserves pass.

Egypt was spared from the strikes, but the decision by several major shipping companies to bypass the Suez Canal and instead sail around the Cape of Good Hope will impact the country's revenues.

Very high inflation

Heavily dependent on imports, the Egyptian economy remains extremely sensitive to fluctuations in its currency, which has lost two-thirds of its value since 2022. In August 2023, inflation was nearing 40%. 11.9% last January – and since then, the country has been working to stem one of the worst economic crises in its history. At the end of February, the International Monetary Fund (IMF) announced that it had released approximately $2.3 billion (€1.9 billion) to Egypt, following a new assessment of its economic reform program. Facing the risk of a debt crisis, the country has received several billion dollars in aid from the IMF and the European Union to ensure its financial stability. Austerity measures introduced under the IMF support program, the Covid-19 pandemic, and the repercussions of the war in Ukraine have severely strained the Egyptian economy in recent years. More recently, the war in the Gaza Strip and attacks by Houthi rebels in the Red Sea have significantly reduced revenues from the Suez Canal, a major source of foreign currency.