Assessing the Impact of Economic Shocks on the Exchange Rate of the Egyptian Pound During the period 1977-2022
DOI:
https://doi.org/10.33948/ESJ-KSU-18-1-6Keywords:
Exchange rate, Egyptian pound, Economic shocks, Domestic inflation, Imported inflation, External debt, Foreign reserves.Abstract
: This study analyzes how economic shocks affect Egypt’s exchange rate (1977–2022), focusing on external debt, reserves, and inflation. Using VAR models and World Bank data, the findings reveal That Exchange rate shocks and their determinants (reserves, inflation, debt) exhibit prolonged impacts that fade slowly. The exchange rate is most vulnerable to its own shocks, followed by reserves (the strongest external influence), domestic inflation, imported inflation, and external debt. Domestic inflation shocks are more damaging and persistent than imported ones. Recommendations include adopting dependence, and bolstering foreign reserves to enhance resilience to external shocks. The study underscores the need for structural reforms to stabilize Egypt’s exchange rate amid economic turbulence.
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Saudi Economic Association – King Saud University.
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