Daker Abdellah, member of the Egyptian Federation for Construction and Building Contractors (EFCBC), urged the immediate floatation of the Egyptian pound to avoid the bankruptcy of factories.
Abdellah warned of an expected disaster that began to take its toll on the Egyptian economy, as an increasing number of factories have ended their businesses and laid off their workers, due to their inability to import raw materials after the escalated US dollar crisis in the recent period.
He noted that several factories began to lay off their workers, and this number is expected to increase in the coming period if the state did not solve the US dollar crisis and provide the factories with their foreign currency needs.
The factories mainly rely on importing raw materials, which requires them to deal in US dollars. The shortage of US dollars in banks has forced these manufacturers to secure their foreign currency needs from the informal market, which sells the US dollar at a higher exchange rate than the banks, according to Abdellah.
He said that the floatation of the Egyptian pound is the only solution to the US dollar crisis, so as to unify the price of the US dollar, while the banks take necessary measures to direct the US dollar for importing and industrial purposes, in prevention of storing US dollars.
Abdellah added that investors and manufacturers have to provide a document proving that they obtained their US dollars from banks, which will help in eliminating exchange companies dealing in the informal market. It will enable the Central Bank of Egypt (CBE) and government to control the exchange market.
The floatation of the Egyptian pound will liberate the exchange rate according to the supply and demand law in the market, which contributes to eliminating the informal market and ends the frequent increases in the price of the US dollar, according to Abdellah.
He pointed out that this measure will increase the price of US dollars immediately during the first three days, but it will decrease later to finally settle at a certain point.
Abdellah warned that the policies pursued by the CBE will not control the foreign currency exchange rate. The more the CBE devaluates the Egyptian pound against the US dollar, the more the informal market will increase the US dollar exchange, so the crisis would not end.