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Sunday, December 30, 2012

More Chaos in Egypt: A Run on Foreign Currency

Surprise, surprise, surprise: Egypt is facing more chaos.

As reported by Reuters in an article entitled "Egypt reserves plunge as economic crisis bites" (http://www.reuters.com/article/2012/12/29/us-egypt-currency-idUSBRE8BS09620121229):

"Egypt's central bank said it would start foreign currency auctions on Sunday to conserve reserves that have fallen to a critical level, pointing to a deepening economic crisis as President Mohamed Mursi tries to calm political turmoil.

. . . .

The central bank has spent more than $20 billion in foreign reserves to support the pound since a mass uprising against Hosni Mubarak in early 2011 chased away tourists and foreign investors.

. . . .

Violent street protests and political wrangling over the last month have prompted a rush by investors and ordinary citizens to switch their Egyptian pounds into foreign currency on concerns the government might devalue or bring in capital controls.

The bank allowed the pound to weaken to an eight-year low of 6.188 to the U.S. dollar on Thursday."

Add to this equation unemployment and poverty among Egypt's younger population. As reported by the BBC (http://www.bbc.co.uk/news/world-middle-east-19298405), "nearly one in four Egyptians between the ages of 18 and 29 [is] unemployed - and just over half all young Egyptians [are] classified as living in poverty."

Also, factor in growing illiteracy, i.e. 27% of Egypt's 85 million citizens (see: http://al-shorfa.com/en_GB/articles/meii/features/main/2011/08/05/feature-01), and Egypt's high birth rate (see: http://english.ahram.org.eg/NewsContent/1/64/57297/Egypt/Politics-/Egypt-birth-rate-goes-up-in-.aspx).

It's not going to be pretty.

1 comment:

  1. Yeah. Some three weeks after the "revolution," I heard on NPR: "After the successful revolution ..." My immediate response was: "And you know that that was a successful revolution ... how?" People are illiterate.

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