"The prices of basic goods will not increase no matter what happens
to the dollar, and nothing will happen," Sisi said in a speech. "The
military and the government are responsible, it's a promise."
Egypt's
President Abdel Fattah al-Sisi reacts after delivering a speech at the
Lower House of parliament in Tokyo, Japan, February 29, 2016.
Egypt's President Abdel Fattah al-Sisi
said on Wednesday he would make sure the price of basic goods does not
increase regardless of what happens to the value of the currency.
Egypt
relies heavily on imports and has been facing a dollar shortage since
the popular uprising in 2011 drove away tourists and foreign investors,
major sources of hard currency.
The government has
taken a series of measures to keep the price of basic goods from
rising, rolling out army trucks to distribute subsidised food items for
its poorest and identifying key goods to monitor for price rises.
A
black market for dollars has sucked up liquidity from the banking
system while the central bank kept the pound artificially strong and
rationed dollars through weekly auctions, putting a strain on foreign
reserves.
"The prices of basic goods will not increase no matter what happens to the dollar, and nothing will happen," Sisi said in a speech. "The military and the government are responsible, it's a promise."
The
Egyptian pound has weakened in recent weeks on the black market with
traders on Tuesday giving a range of 10.25-10.28 per dollar. Egypt's
reserves more than halved to $16.56 billion in March from around $36
billion in 2011.
In an attempt to close the gap
between official and black market rates, the central bank devalued the
currency to 8.85 per dollar from 7.7301 last month. It later
strengthened it to 8.78 per dollar, while adopting a more flexible
exchange-rate policy.
The central bank said it
would move to a more flexible exchange rate regime, in an effort to
rebalance markets and ease a foreign exchange shortage that had stifled
business activity and hit confidence.
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