What Is the Egyptian Pound (EGP)?
The Egyptian Pound (EGP) 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.
As of Q2 2021, one EGP is worth roughly $0.064 in U.S. dollars (USD).
- The Egyptian Pound (EGP) is the official currency of the 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.
- The EGP is also used as the unofficial currency in regions such as Sudan and the Gaza Strip.
Understanding the Egyptian Pound (EGP)
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 100th portion of the pound, in essence becoming a one-cent coin. In 1916, the coin was divided again and renamed the millimes.
The EGP 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, 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 USD. The Egyptian pound was devalued with the USD in 1973 and by itself in 1978. From that point, the EGP 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 EGP devalued by 32.3% 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 of July 2021, one USD is worth 15.7 Egyptian pounds.
Slang Names for the Egyptian Pound (EGP)
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 1,000 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.
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 was under Ottoman and British rule until it 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. Egypt’s economy, like the rest of the world, got hammered by the COVID-19 pandemic. Tourism, in particular, was badly impacted, generating $1.8 billion in revenue between July and December 2020 compared to $7.2 billion in the same period in 2019.
Interest rates were cut in response to the damaging COVID-19 lockdown measures. However, the country still has one of the highest real interest rates in the world, which has helped to sell treasuries and protect the currency but discouraged borrowing.
High inflation became a big issue after Egypt was forced to implement austerity measures in exchange for receiving financial assistance from the IMF. Actions such as hiking fuel prices, adding extra taxes on tobacco, and devaluing the currency led inflation to surge to 33% in July 2017.