By Ahmed M El-Wahsh
In light of recent events and happenings across Cairo – from the Tahrir memorial to the deaths at the Air Defence Stadium and Vladimir Putin’s visit – Egypt faces an unsettling currency change against its Egyptian pound to the American dollar. With that being said, the Russian leader met with Abdel Fattah Al-Sisi to discuss the elimination of the US dollar in bilateral trade between both nations.
In an attempt to exclude the American dollar between Egyptian and Russian trade of goods, both leaders have stated to the Egyptian media that the settlement of accounts will occur in respective national currencies. The issue of abandoning the globally-used dollar will expose new outlooks and prospects on business and venture collaboration between Egypt and Russia; hence reducing the reliance and fixation on the global trends in the worldwide markets. Putin stated that the use of national currencies between Russia and a number of Commonwealth of independent states and China has proved time and time again its worth and value for both counterparts’ economies.
Putin continued stating that the amount of bilateral trade has significantly improved over the past few years. And last year, there was an increase of approximately 50% – in comparison to the year before that – this had amounted to an equivalent of $4.5bn of traded products. The Russian leader also acclaimed the fact that Egypt is one of the major consumers of Russian wheat, accounting for approximately 40% of the consumed grains in the country.
In addition, Russia’s capital has promulgated new restrictions on the European Union, United States and various other Commonwealth countries associated with the United Kingdom on food exports to Moscow. This came into action on 7 August 2014 and will be effective for a year. Amidst these imposed sanctions, Egyptian officials guaranteed that Egypt would boost its exports of agricultural produce by 30% to Russia.
With the aforementioned agreements in order, Al-Sisi and Putin are also set to strike more deals within the forthcoming months, with plans of possibly creating a free trade zone specifically for Russia – which will be named the Russian Industrial Zone – in the newly developed Suez Canal Project.
Ahmed El-Wahsh holds a masters degree in Banking and Finance from Queen Mary, University of London. He works as an assistant portfolio manager at QUMMIF Investment Hedge Fund