Fruit and vegetable exports from Egypt to Europe could increase sharply due to devaluation

EastFruit analysts highlight the high risk of major volatility in the regional market for fruits and vegetables due to the impending devaluation of the Egyptian pound against key currencies.

Background

The situation has deteriorated since a year ago. Back then, we reported on the doubling of the dollar exchange rate to the local currency, which was meant to spur the export of fruits and vegetables from Egypt. And that’s what happened – Egypt set many records of fruit and vegetable exports, as EastFruit frequently covered.

What is going on now and what are the causes of the devaluation?

Currently, the official rate of the Egyptian pound is kept stable artificially. However, the unofficial exchange rate is already more than twice as high as the official one – on the “black market” they now offer more than 70 Egyptian pounds for a dollar, while the official rate is around 31.

Due to the Houthi attacks on civilian vessels, causing a sharp drop in the traffic through the Suez Canal, Egypt, which already suffers from a shortage of foreign currency inflows, loses up to $20-25 million US dollars of foreign exchange revenue per day just from the transit fees through the canal, which amounts to $600-700 million dollars per month. Moreover, exporters, especially of fruit and vegetable products from Egypt, who delivered their products to Asia and some Middle Eastern countries, also incur significant losses.