Trading in local currency likely to grow Egypt's economy

Posted on April 24, 2023   |  

Egypt began trading with other nations without using the USD. The country decided to import Russian and Indian products using the money of Russia and India. 

The country will not have to secure US currency to import goods from both countries after the implementation of the (LCS) local currency settlement mechanism in 2018 which is accepted by several countries, like Japan, Thailand, Malaysia, and China. 

This maintained an optimistic growth for LCS in the financial markets and registered $868 million in Q1 2022. The adoption of this mechanism in international businesses will boost the country's economic recovery.

In September 2022, Russia accepted a settlement mechanism using the local currency in trade exchange with Egypt, which includes a mutual approval of payments in the EGP or the Russian ruble.

The agreement will reduce Egypt's dependence on USD for trade and provide many basic strategic commodities, primarily wheat.

Experts are expecting Egypt to seal a similar deal with China, as in January 2023, Chinese imports grew by 14.7% to Egypt, while Russia’s share made up 7.4% of the country’s imports.