The automotive market in Egypt has been experiencing an unprecedented wave of price hikes due to a dollar crisis amid anticipation by analysts that the Egyptian pound would be further devaluated by the Central Bank.
Fluctuations in the exchange rate have cast shadow on the import sector, threatening a potential stagnation in the car market, as an acute hard currency shortage hampers trade in the import-dependent country.
“We closed our store over the past five days,” said Kareem Hussein, sales manager at Stars Auto store in downtown Cairo.
“The increase of the dollar’s exchange rate against the local currency caused stagnation in the sales and made the clients reluctant to conclude any deal,” he added.
The Egyptian pound weakened to a shocking rate of 13 against the U.S. dollar on the black market on Tuesday, at least 42 percent weaker than the Central Bank’s official rate of 8.78.
On Friday, the pound was trading at around 11 per dollar on the black market after a security crackdown had been launched on many exchange offices on Wednesday and Thursday.
The official banking system has been suffering from lack of “dollar resources” since the 2011 popular uprising, which led to the reluctance of foreign tourists and investments, the two main sources of hard currency.
Auto sales have declined by nearly 50 percent in July due to the unprecedented price hikes, Hussein said. Some 10 percent of the clients have withdrawn their deposits last week, he pointed out. “We live in a nightmare due to the dollar crisis,” he lamented.
The devaluation of pound has caused tremendous losses in the car sector and forced the merchants to increase the prices by 32 percent and made them looked like “exploiters.”
Not Enough Dollars
We see the same story once again: “There are not enough dollars to go around.” Mercy! Get out the printing presses.
Mike “Mish” Shedlock