The conflict in the Middle East between Israel and Palestine is proving to be expensive for new BRICS member Egypt, as the US dollar sharply spiked by 50% in the country’s foreign exchange black market. The development is stunting the growth of an already ailing economy in Egypt making the US dollar stronger in both the legal and forex black market.
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One US dollar is officially worth 30.90 Egyptian Pounds (EGP), according to the traditional foreign exchange market. However, the same value puts the Egyptian Pound range from 45 to 47 EGP against the US dollar. BRICS member Egypt’s currency is at a record low against the US dollar in both the traditional and black market.
The move brings inflation into Egypt as basic commodities, mostly exports, will rise tremendously. Egypt is directly impacted by the ongoing Israel and Palestine conflict as it shares a border with the country.
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“The Israel-Gaza war is one of the factors taking a heavy toll on the Egyptian pound, bringing it down to a record low,” said economist Ahmed Abdel-Thaher to The New Arab.
“Perhaps Egypt is on top of the countries in the region influenced by the ongoing fighting between the Palestinian Hamas faction ruling the Gaza Strip-Hamas as the war has increased the geopolitical risk for the country,” he explained.
BRICS: Egypt & Iran Remain Under Pressure
The two new BRICS currencies Egypt and Iran now remain under tremendous economic pressure due to the conflict. While Egypt’s currency devalued against the US dollar, Iran is unable to lift its economy due to the strife. Iran is sanctioned by the US for sponsoring terrorism, and the regime is unable to provide weaponry to Palestine.
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Both the BRICS countries are in a tight spot now and are now looking to lift their economy first. If the Israel-Palestine conflict escalates, Egypt’s currency and Iran’s economy would be the hardest hit.