Oct 21, 2016

The Use of Gold as Reserve to Support the Egyptian Pound

Arab Net News reported (10/19/2016) that the Egyptian government is shipping to Canada its monthly gold production of 344KG from the Sukari mines to be purified and sold in the world market.
The Sukari mine of Egypt is classified as one of the ten largest gold mine in the world.
In some western countries such as the US, gold has been kept as reserve to back up the security and value of the dollar in the world market.
The Egyptian pound value in the Egyptian market as well as in the world market has been decreasing steadily especially in the last few years. One of the reasons is the fact that the number of US dollars in the Egyptian Central Bank has been decreasing substantially. Presently, the official rate of the US dollar is equal to 8.83 LE, while the value of the dollar in the black market is almost double the official rate (1 dollar equals 15.50 LE).
Egypt is exporting a small amount of gold. The question to be asked why doesn’t the Egyptian government put some of that gold in reserve to back up the value of its currency, and to stop decreasing the value of its pound.
This devaluation of the Egyptian pound is having an impact on the Egyptian economy. It led to an increase in the cost of living, a situation that the public is objecting to.