Egypt Stops Using USD for Trade

As of February 15th, 2024, Egypt announced that their country will stop using the USD in all its trade transactions with other countries. They are now transitioning to the use of their local currency- the Egyptian Pound.

The switch to EGP is part of the BRICS de-dollarization program as Egypt was one of the five countries to accept the invitation into BRICS in 2023. BRICS now includes Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and UAE.

Currently, the conversion rate is 1 USD = 30.9 Egyptian Pounds. The Ministry of Foreign Affairs assured that the country will urge other countries to begin using their national currencies to limit the costs of using foreign currencies with other settlements.

The United States has conveyed concern about the decision and urged the country to reconsider. To help this, the U.S. said it could review its relationship with Egypt, including its military aid.

This change could benefit Egypt by reducing its exposure to exchange rate changes and strengthening Egypt’s bargaining power with other countries.

However, this could be risky. This change could start alienating its allies, lead to potential retaliation from the U.S., and disrupt trade flows.

Currency exchange rates are very important in global trade. Increases in exchange rates reduce the balance of trade in a country by reducing exports and increasing imports.

The daily exchange rate as of March is:  1 Egyptian Pound is equal to  0.032  USD. If you have any questions on trade regulations, currency, and its impact on your business- reach out to one of our experts at sales@allynintl.com.

Contributor: Alex Morgan, LCB

(The Street Journal, Tekedia)

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