The Egyptian Pound, a Troubled Currency, Gets Pounded

Last month two Egyptian banks refused to give Ahmed El-Rifai the dollars he needed. His company, Egyweb, sells ads locally for Facebook, and he had to pay the U.S. company its share of the revenue in greenbacks. Frustrated, El-Rifai turned to a more reliable source: the black market, which sold him dollars at an 8 percent markup to the official exchange rate of 6.7 pounds to the dollar.

The emergence of an unregulated currency market shows that Egyptians’ faith in the country’s pound is weakening. The biggest slide in foreign exchange reserves in at least 15 years has prompted the Central Bank of Egypt to curb access to dollars, which the government needs to service external debt, finance imports of food, and buy oil. The pound has dropped 5.6 percent so far in 2013, making it one of the world’s 10 worst-performing currencies, along with the Venezuelan bolívar and the Malawian kwacha. Traders expect it to weaken another 6 percent in the next three months.