What is the EGP (Egyptian Pound)?
The EGP (Egyptian Pound) is the official currency of the Arab Republic of Egypt, as designated by ISO 4217, the International Standard for currency codes. The Egyptian pound's symbol is E£. The currency can also be noted by the symbol LE, which stands for livre égyptienne, French for Egyptian pound. The Egyptian pound is also used, unofficially, in the Gaza Strip and in parts of Sudan.
Understanding the EGP (Egyptian Pound)
The Egyptian pound (EGP) replaced the Egyptian piastre in 1834. The new currency issue had a fixed rate bimetallic standard of gold and silver. The piastre continued to circulate as a 1ooth portion of the pound, in essence becoming a one-cent coin. In 1916, the coin was divided again and renamed the milliemes.
The pound was tied first to the gold and silver bi-metal standard and then to the British pound sterling (GBP), until 1962. Egypt founded a central bank in 1961, the Central Bank of Egypt located in Cairo. The bank became the Arab Republic's monetary authority and controlled the circulation of the Egyptian pound. In 1962, Egypt changed the valuation of the pound and pegged it to the U.S. dollar (USD). The Egyptian pound was devalued with the USD in 1973 and by itself in 1978. From that point, the pound had a floating exchange rate.
Seeing the value of the EGP fall, the Central Bank of Egypt stepped in and began a managed float in 2001. The managed float continued until 2016 when the bank decided in favor of allowing the currency to float freely again. With this decision, the value of the currency plummeted. After the central bank's decision to float the currency, the pound devalued by 32.3 percent and continued to lose value. Also, the bank raised interest rates by 300 basis points to stem the expected inflation. The International Monetary Fund (IMF) required the devaluation of the EGP as a condition for Egypt to receive a $12 billion loan.
Before the float, a U.S. dollar was worth 8.8 Egyptian pounds. Whereas after this action, with the unpegging, a dollar was equivalent to about 15 Egyptian pounds. As an example of the continued deterioration of the EGP's value, as of May 2018, the exchange rate was 17.6 Egyptian pounds to every dollar.
Since the 2016 devaluation, the Central Bank of Egypt has taken several steps to shore up EGP and the Egyptian economy as a whole. In April 2018, the government announced a reduction in interest rates, the second 1-percent rate cut in two months, meant to attract investments from home and overseas.
- The EGP (Egyptian Pound) is the official currency of Arab Republic of Egypt, with the symbol E£.
- Initially backed by precious metals, the Central Bank of Egypt stepped in and began a managed float in 2001 through 2016, at which time it transitioned to a free float.
- Before the float, a U.S. dollar was worth 8.8 Egyptian pounds. After this action, with the unpegging, a dollar was equivalent to about 15 Egyptian pounds.
- EGP is also used as the unofficial currency in regions like Sudan and the Gaza Strip.
Slang Names for The Egyptian Pound
Egyptian banknotes feature both English and Hindu-Arabic numeral on one side and Arabic texts with Eastern Arabic numbers on the other. Egyptians have different slang nicknames for various denominations of the pound.
- Baku, or pack, for 1000 EGP notes
- Arnab, or rabbit, for 1,000,000 EGP banknotes
- Feel, or elephant, for 1,000,000,000 EGP bills
In 2006, Egypt introduced 50 piastre and 1 pound coins, showing the faces of Cleopatra and Tutankhamun, and phased out bank notes for those denominations.
Egypt's Economy & Inflation
The ancient country of Egypt lays on the Mediterranean and is a land rich in ancient history. The region saw the development of writing, agriculture, and organized religion and government. Egypt has seen Ottoman and British rule until declared itself a republic in 1953. Decades of involvement in regional wars including those in Yemen, the Sinai Peninsula, and the Gaza Strip have taken a toll on the nation, its economy, and its people.
The economy of the Arab Republic of Egypt depends on agriculture, petroleum, and tourism. There is still a wide difference in incomes and the distribution of wealth. According to the 2017 World Bank data, Egypt has a lower-middle income economy which is facing a great impact from inflation. The yearly gross domestic product growth per year is at 4.2% while the inflation deflator is at 22.9-percent.
Improvements in the separation of income and education of the population have come since the fall of the monarchy in the early 1950s. A change in the government's allegiance from the Soviets to the United States happened in 1972. Repeated terrorist attacks have rocked the nation and a population boom has led to unemployment, poverty, and overcrowded cities. In 2011, civil unrest forced the resignation of the president, and the military took control of the nation until new elections held in 2012. The military would step in again in 2013 after public discontent and fears of the Muslim Brotherhood gaining control of the government. A new government was seated in 2014.