The Central Banks of the United Arab Emirates and Egypt have agreed to a currency exchange deal, intended to bolster the struggling Egyptian economy. A joint news release said the agreement would allow the two central banks to exchange up to 5 billion Emirati dirhams and 42 billion Egyptian pounds, or roughly the equivalent of $1.36 billion.
In the last 18 months, the Egyptian pound lost more than 50 percent of its value against the dollar. The country is suffering from a shortage of foreign currency. Egypt, the Middle East’s most populous country, is the world’s largest importer of grain. Its supplies traditionally have come from eastern Europe, so it has been hit hard by the fallout of the Ukraine war.
Last month Egypt’s annual inflation rate stood at 39.7 percent, more than double compared to the same month last year, when it recorded 15.3 percent. Currency swap arrangements are usually deployed when nations are seeking to shore up central and domestic banks by providing them with extra liquidity in the form of a foreign currency.