Unprecedented rises in gold prices have hit Egypt. Egyptians are stockpiling gold to protect their savings as their national currency continues to lose value against foreign currencies.
The stampede for gold has driven up its price in the local market significantly, prompting experts to warn of the possibility of a gold price bubble.
According to independent economist Mamdouh al-Wali, gold is now priced in relation to the parallel, rather than the official, market exchange rate of the US dollar. “Speculation is very high, raising concerns about the future price of this metal and other commodities,” he said.
Moneyed Egyptians, including those with meager savings, keep watching as the Egyptian pound is dwarfed in value by foreign currencies.
The gap between the official rate of the Egyptian pound and the black market price has widened further, putting Egypt under pressure ahead of a crucial International Monetary Fund (IMF) board meeting next week.
Despite two major devaluations this year, Egypt continues to face a foreign currency shortage.
Egypt’s request for a $3 billion Extended Fund Facility to help shore up its finances is due to be reviewed by the IMF on December 16.
On October 27, Egypt and the IMF announced the package at the staff level.
The forecast for the exchange rate of the Egyptian pound against foreign currencies is far from promising, amid expectations that the CBE might resort to an additional devaluation of the pound in the coming weeks.