The local currency of many countries is facing pressure against the US dollar, especially after the global economic crisis, as these countries are looking for an alternative to protect their currency and relieve pressure on it. This is done through a set of procedures, including an agreement with its trading partners on the exchange of trade in the local currency.
Pound and Russian ruble
Local currency transactions
Ibrahim Ashmawy, First Assistant Minister of Supply and head of the Commodity Exchange, said that the Ministry of Supply had proposed to the Ministry of Foreign Affairs to conduct transactions in the local currency between Cairo and Moscow.
Ashmawy confirmed that the Ministry of Supply proposed to the Ministry of Foreign Affairs to deal in the local currency between Cairo and Moscow, but the matter requires consensus between central banks, stressing that food security is a national security for countries.
Ashmawy said, in an interview with the Russian agency Sputnik, that the ministry proposed to the Ministry of Foreign Affairs – as it is always the mirror in external dealings, and then all proposals by the relevant ministries end for discussion with other countries – dealing in local currencies between Cairo and Moscow.
The first assistant minister added, “The matter requires international consensus among central banks.”
Ashmawy noted that food security is an essential component of the national security of countries, and with the suspension of the grain deal, countries may resort to searching for other alternatives, such as hedging, futures contracts, or fixing import prices in agreement with investment banks, in order to reduce price fluctuations.
Russian ruble
More than 460 Russian companies
Abu Bakr El-Deeb, a researcher in international relations and political economy and advisor to the Arab Center for Studies, said that there are many benefits to adopting the Egyptian pound as an official currency by the Central Bank of the Russian Federation, most notably the doubling of trade and investment exchange between the two countries and the increase in tourism is the most important gain, and Egypt and Russia will be allowed to use the ruble and the pound in Commercial transactions between the two countries instead of the dollar, and will work to “double trade and investment exchanges between the two countries.”
He added, during statements to “Sada El Balad”, that the volume of trade exchange between Egypt and Russia reached about $4.7 billion for the year 2021, and that adopting the pound in the Central Bank increases Egypt’s exports to Russia and reduces the cost of imports from Russia, thus reviving foreign cash reserves and raising the value of the pound. It reduces the need for dollars.
Abu El-Deeb stressed that Egyptian tourism will be the biggest winner from this step, as Egypt benefits from the increase in the number of Russian tourists coming to it, who represent 25% of the total incoming tourism to Egypt. The decision also facilitates the process of trade exchange between the two countries and relying on the two currencies in settling commercial transactions.
El-Deeb pointed out that Russian investments in Egypt amount to $8 billion, and most of them are concentrated in the energy sector. “.
Al-Deeb continued his speech, saying that the relations between Egypt and Russia are strong and historical, as Moscow supported Cairo during the challenges of the sixties with regard to the Suez Canal and the October War, as well as cooperation in building the High Dam, the iron and steel factories in Helwan, the Naga Hammadi aluminum factory, and other factories.
Dollar and ruble
The first nail in the coffin of the dollar
And he continued: When Russia accepts currencies other than the dollar and facilitates the countries with strategic partnership with Moscow, such as Egypt, the Emirates and Qatar, this matter will make there new currencies and the ability of the Russian economy to recover as well as weak economies, and Russia will have new exchange markets without the need for the dollar, and dealing in currencies Local is the first nail in the coffin of the dollar, pointing out that this step is tantamount to ending dealings in dollars and eliminating the “bullying” of the dollar internationally, noting that dealing with Egypt and Russia in local currencies is a strong step towards strengthening joint cooperation between them.
And he added: The Egyptian market is large, as it has a population of more than 100 million people, in addition to the fact that Egypt is an importing country in the first place, as imports are greater than exports and therefore fall under the penalty of extortion of the dollar and its high value, and the policies of the US Federal Reserve repeatedly raising interest rates before fixing them recently. This gives strength to the dollar while weakening the currencies of emerging countries, including Egypt and Turkey, for example, and increases inflation rates in those countries.
He continued: There are other strong currencies in the world, such as the Russian ruble and the Chinese yuan, due to the increase in the volume of their trade exchanges, investments, and economic transactions, so it is possible to gradually replace the dollar, and he also highlighted that many countries of the world have begun to implement this matter with China and Russia, and that The agreement between Egypt and Russia to deal in the local currency carries many economic benefits, on top of which is relieving pressure on the Egyptian pound against the dollar and revitalizing trade between Egypt and Russia, indicating that Egypt is a gateway to a huge commercial market that includes 1.4 billion people in Africa, and about 350 million Arab citizens. .
He stressed: Egypt and Russia dealing with local currencies will open the door to other countries such as the UAE, Algeria and Saudi Arabia, which will prompt many countries in the region to strengthen cooperation with Russia intensively in the same way, in addition to the “BRICS” grouping, which is considered strong and important, as it includes Russia, China, India, Brazil and South Africa, an emerging gathering to confront the Group of Seven and Western domination of the global economy, which increases the demand of countries to join it and deal in currencies other than the US dollar.
It is noteworthy that in January 2023 the Russian Central Bank said that it would now set the daily official exchange rates for the ruble against nine currencies, including the UAE dirham, the Thai baht and the Indonesian rupiah, in addition to the Vietnamese dong, the Serbian dinar, the New Zealand dollar, the Georgian lari, the Qatari riyal and the Egyptian pound.
2023-07-29 15:24:00
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