UAE and Egypt central banks enter currency exchange deal

The agreement allows the two central banks to trade up to five billion Emirati dirhams and 42 billion Egyptian pounds.

In a significant move aimed at shoring up the struggling Egyptian economy, the central banks of the United Arab Emirates and Egypt have reached a pivotal currency exchange deal. 

This groundbreaking agreement, outlined in a joint news release on a Thursday, opens the door for the exchange of up to five billion Emirati dirhams and 42 billion Egyptian pounds, approximately equivalent to $1.36 billion.

Addressing Currency Devaluation and Shortages

Egypt has been grappling with a significant devaluation of the Egyptian pound, which has lost more than 50 percent of its value against the U.S. dollar over the past 18 months. 

This situation has been compounded by a shortage of foreign currency, presenting economic challenges for the nation.

Impacts of the Ukraine War

The repercussions of the Ukraine war have further exacerbated Egypt’s economic woes. 

As the most populous country in the Middle East and the world’s largest importer of grain, Egypt traditionally relies on Eastern Europe for its grain supplies. 

The conflict’s effects on global food supply chains have hit the country hard, underscoring the urgency of measures to stabilize the economy.

The currency exchange agreement between the UAE and Egypt’s central banks represents a significant step toward addressing Egypt’s economic difficulties and strengthening its financial resilience in the face of ongoing global challenges.