Under the influence of many adverse factors, such as the Federal Reserve's interest rate increase, the Palestine Israel conflict, the Russia-Ukraine conflict and so on, several countries in the Middle East will suffer from it in 2023, with currency devaluation, inflation soaring, and even the middle class families returning to poverty overnight, which will seriously affect their imports.

Among them, Egypt is one of the countries most affected.

Local currency plummeted

In October 2023, a new round of Palestinian Israeli conflict broke out, and the negative emotions brought about by the conflict once again impacted the Egyptian exchange rate market. Although the official exchange rate remained unchanged, the Egyptian pound fell to a historic low in parallel markets, becoming one of the worst performing currencies among emerging market countries.

People engaged in foreign trade know that when a country's local currency falls against the US dollar, it means that its purchasing power weakens, which will increase import costs and reduce the purchasing willingness of importers in the country.

Industry insiders say, "The shortage of foreign exchange has caused difficulties in external payments, and many foreign exporters have lost confidence in Egypt, which has forced a significant decline in commodity imports."

The Egyptian government has also introduced policies to restrict imports, especially parts and accessories for passenger cars, cars and tractors, propylene polymers, and mobile phones.

Egypt's foreign exchange reserves are already stretched thin, and as an important source of foreign exchange, the Suez Canal has been plagued by the Houthir armed forces since the end of last year, blocking its financial path, which has further worsened the already deeply crisis ridden Egyptian economy.

High inflation

Under the triple pressure of continuous rising prices, soaring inflation, and currency depreciation, the lives of the Egyptian people have become increasingly difficult.

According to published data, Egypt's inflation rate in 2023 fluctuated at a high level far above normal.

Many commodity prices have doubled within a year, with food and beverages and other daily necessities being the most affected. Many people have had to significantly reduce their purchases of meat, fruits, and dairy products, and some essential foods have now become luxury goods for Egyptians. Inflation not only undermines the purchasing power of Egyptians, but also weakens their confidence in the future.

Foreign traders exporting to Egypt must pay attention to collection of foreign exchange risk!