Greenback trouble? Switch to rouble

The second most popular holiday destination for Russians is Egypt.

Now, Mr and Mrs Lotov and their son, Mo can get their LE’s before they jet off to Hurghada on the Red Sea coast.  

Egypt is Russia’s biggest customer for wheat, so it makes sense to buy this grain with Egyptian pounds.

This is thanks to a surprise move by the Russian Central Bank on 18 January to list the Egyptian pound on the Russian exchange rate list.

This is a win-win situation in which the middle man, the greenback, is bypassed, which means that falling US dollar reserves, a headache for the banks in recent months, should be a thing of the past.

Experts agree that listing the pound with other exotic currencies such as the baht, the dong and the lari(which would spice up a pub quiz) will have a favourable impact on the Egyptian economy in dealing with the global economic crisis.

Economist Alaa Ali of the Agricultural Bank of Egypt said: “The Russian Central Bank’s decision will push up trade with Russia and we need not rely so much on the US dollar, especially since trade exchange is worth ten-plus digit sums.“

“Russian tourists coming here can exchange their roubles for local currency now that bilateral trade is back to pre-pandemic and pre-war in Ukraine levels,” he said.

According to latest figures from the Central Agency for Public Mobilisation and Statistics, Egyptian-Russian trade rose 16.5 per cent in January-October 2022, compared to the same period in 2021.

Osama Saeed, who is former Dean of the Faculty of Commerce at Beni Suef University, told this paper that Russia imports Egyptian fruit, vegetables, cotton and cotton.

“Bilateral trade in 2021 was worth $4.7 billion, up 5.1 per cent,” Saeed added.

“Paying for imports in roubles will surely raise Egyptian exports to Russia,” he said.

Mohamed Shaarawi, who is professor in financial market economics, said: “Egypt will soon be member of BRICS (Brazil, Russia, India, China and South Africa) trading group, which means the Egyptian pound will be welcome in transactions with these countries.”

“The savings in US dollar will consequently be tremendous and similarly, if

China agrees to deal with us pound as an inalienable currency, it will prove a boon to dollar reserves, particularly since Egyptian-Chinese is worth $18 billion a year,” Shaarawi said.

Waleed Diab of the Federation of Egyptian Industries sounded a note of warning.

“The details of the move must be made clearer in viewof sanctions on Russia. Nor has any Egyptian bank made any decision to list the rouble on its list of exchange currencies,” Diyab said.