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Currency Analysis - Egypt

In: Business and Management

Submitted By sphinx821
Words 1905
Pages 8
Term Project: Currency Analysis Egypt

International Finance

The currency of Egypt is the Egyptian pound (EGP) and over the last 10 years its value against the US dollar has changed but not as much as people may have thought it to. In order to understand how and why the currency has changed over the past 10 years, we have to look at a number of factors that impact a country’s currency. The things that impact a country’s currency include economic factors such as the strengths and weaknesses and imports and exports, a country’s current financial status including the market and banking system, the exchange rate system, the country’s reserve and also the role and action of the central bank. The last factor that can help to predict a country’s future is the government; this includes GDP, taxes, and legislative changes.
As stated above, over the last 10 years the EGP has undergone some fluctuation. As of December 10, 2002, the value of the EGP when compared to the US dollar was .21563. As of today when the EGP is compared to the US dollar the value is now .16385 (XE, 2012). However, the value was only up at .21563 for a brief period of time, it dropped sharply at the end of January from close to .22 by almost 3 points and continued to fall until the end of 2004 bottoming out at a low of .15852. Over the course of the next 4 years, the value of the EGP steadily grew until it topped out close to .19 in early August of 2008. Unfortunately, the value of the EGP has not seen a steady increase since (Figure 1).

(XE, 2012)
The reasons for the initial drop in the EGP can be attributed to monetary pressures overvaluing the EGP causing the Egyptian government to float the currency which also lead to an increase inflation of the EGP (Egypt Economy, 2012). A reason that there was another drop in value of the EGP in 2010 could have been attributed to the...

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