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Currencies
EGYPTIAN POUND
Introduction | Overview | Structure | History | Factors affecting change in exchange rates | Daily trend of Egyptian pound | Weekly trend of Egyptian pound
Introduction


Pound is referred to one of the oldest the currency units that is being still used in many countries including United Kingdom, Egypt, Cyprus, Syria and Sudan. United Kingdom pound or in other words, Great Britain pound is considered to be the most important pound denominated currency among the countries mentioned above. Other important pound denominated currencies include the Egyptian pound on the second place.

Egyptian pound is counted as the national currency of Arab Republic of Egypt. The currency is also denoted with the signs LE, L.E. (derived from the French name given to the Egyptian pound i.e. livre égyptienne) and also with the signs E£ and £E. In Arabic language, the currency is noted as "ج.م" that translates to "gunaih" in English. According to ISO 4217 regulation, EGP is the currency code and 818 is the numeric code for the currency. The subunit is being served by "piasters" and "milliemes". Egypt had been using the pound currency since 1836.

Overview


Egypt is the most populous Arab country in the world and lies on the 2nd place in context of size of economies of the Arabian countries. The economy of the country has been dominated by the agriculture, tourism and petroleum sector but still has a huge trade deficit. That is why there is a need of further improvement in the value of the currency so that Egypt could pay back most of the loans and reduce financial burdens. Currently, the notes, which were issued in or after 1978, are still in circulation and the earlier notes have been withdrawn from the economy. The import and export limit of the local currency extends up to 5000 pounds but there shall be no limit in the import and export of foreign currencies.

Structure

The structure of the Egyptian currency is mostly based around the banknote version of the currency and not the coinage. "Piastre" is the decimal sub unit of Egyptian pound with "milliemes" that are 1/1000 of one unit of the currency. The sole right to issue and circulate Egyptian pound is with the Central Bank of Egypt as well as the coinage minting function is looked after by the bank. The banknotes are issued in 10 face values making it the more dominating version. The denominations include 5, 10, 25 and 50 piastres, 1, 5, 10, 20, 50 and 100 pound notes. The central bank does not issue 5 and 10 piastres notes and hence they are issued by the state. All the notes are printed in Arabic language on the front side and possess images of various mosques in Egypt. The backside of the note is printed in English language and has different images of important Egyptian buildings. The notes currently in circulation posses the images mentioned in the following list
  • 100-pound note - Image of Sultan Hassan mosque on the front and Sphinx head on the backside
  • 50-pound note - Image of Abu Hariba mosque on the front and Edfu temple on the backside
  • 20-pound note - Image of Mohammed Ali mosque on the front and pharaonic drawings on the pillars of Sesotris I temple on the backside
  • 10-pound note - Image of Refa’ie mosque and statue of Chefren on the backside
  • 5-pound note - Image of Ibn Touloun mosque and pharaonic drawings on the backside
  • 1-pound note - Image of the mosque of Sultan Qaitbay on the front side and a part of facade of Abu Simbel temple on the reverse side
  • 50-piastre note - Image of Al Azhar mosque on the obverse side and the statue of Ramsis II on the reverse side
  • 25-piastre note - Image of Al-Sayida Aisha mosque on the front side and the eagle of Salah El Din on the backside.

The coins in the currency are minted for six face values that are 5, 10, 20, 25 and 50 piasters and 1 pound.

History


Before the mid 19th century, some locally minted coins were used for exchange in Egypt in absence of an official currency of the country. In 1834, a parliamentary bill was passed related to the introduction of new currency and the same was executed in 1836 when the Egyptian pound came into existence. The currency was initially based on a bimetallic standard i.e. gold and silver but due to fluctuations in the value of silver and adoption of the gold standard by most of the countries with whom Egypt traded to, it too had to adopt de facto gold standard in 1885. Also, at this time, the subunit of the currency countered a major change when the subunit of Egyptian pound i.e. piastre was subdivided into tenths instead of "para" that had value 1 piastre = 40 paras initially.

In 1898, the National bank of Egypt was formed and one year later it issued the first banknotes in the history of the country. These notes were convertible into gold in the initial years but in 1914, a law was passed relating to the dependency of the banknotes and they were legal tender. In 1916, the tenths to piasters were renamed as "milliems". With time, emphasis was given to convert the whole monetary system of Egypt into a banknote-based system as many technological improvements in the notes were introduced. In 1961, the Central bank of Egypt and the National Bank of Egypt were amalgamated to form the central bank of the country named Central Bank of Egypt and was provided with the rights to manage and control the currency.

Factors affecting the exchange rates between two countries


The volatility in the foreign exchange rates depends upon a numerous macro economic factors that have different degrees of importance to different economies of the world. Some special and exceptional factors affecting the rates may also exist in the case of different countries. Following are shown the common factors on which the foreign exchange rate depends

  • Flow of imports and exports between the countries
  • Flow of capital between the countries
  • Relative inflation rates
  • Fluctuation limits on exchange rate imposed by the governments of the countries
  • Merchandise trade balance
  • Rate of inflation in the country
  • Flow of funds between the countries for the payment of stock and bond purchases
  • Relative growth
  • Short term and long term interest rate differentials
  • Cost of borrowings
 
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