Egypt Offers Exchange Rate Relief to Firms Hit by Pound Float

Egyptian companies unable to repay U.S.-dollar denominated debts after the devaluation of the pound will be allowed to negotiate fixed exchange rates with banks.

The move aims to alleviate financial pressure on manufacturers following the central bank’s decision to remove all restrictions on the local currency on Nov. 3. The pound has since lost more than half its value.

Companies need to negotiate individually with lenders to agree on a fixed exchange rate that will be used to finance their debts, Federation of Egyptian Industries Deputy Chairman Tarek Tawfik said in a phone interview, citing an agreement with the central bank. There has been no comment from the central bank on the issue.

Nine of Egypt’s biggest business associations ran a full-page ad in newspapers on Tuesday, appealing to President Abdel-Fattah El-Sisi to find a solution to the “crisis” faced by local companies. Firms are facing bankruptcy because banks are asking them to pay for letters of credit initiated before the pound was devalued at post-float exchange rates, the ad said.