The Euro debt crisis has spiked the value of the Egyptian pound, but this is not good news for everyone, Ahmed Kotb reports Troubled water in the Euro zone, heated by the Euro crisis, has led to serious debate over the effects on the Egyptian market. For some, it has posed a good opportunity to make easy money, benefiting from the surge of the Egyptian pound against the Euro. For others, a higher pound has eroded their income from exports to Europe. The Euro had been trading at LE7.55 per Euro before the crisis and dropped to LE6.9. The weakened Euro means that Egyptian products exported to the European Union (EU) will be more expensive. Imported European products become cheaper. That basically means exporters are losing money, and importers are enjoying good business. "I had to freeze some deals with European importers of my products," says Adel El-Ghandour, manager of Centech, a major exporter of agriculture goods to the EU. El-Ghandour blames the losses on the Euro slide, saying it limits the quantity of products exported to the EU. However, he believes that it is important to adapt to any market changes and find new ways to profit. "In such a crisis I depend more on markets that pay in dollars, such as the Gulf market," El-Ghandour said. Alaa Ezz, secretary-general of the Confederation of Egyptian European Business Associations (CEEBA), has a different perspective. He says that the Euro slide is a positive phenomenon for the Egyptian market. Ezz challenged the widely accepted idea that a higher Euro value is bad for Egyptian exports. "People think our competitiveness in the European market is at stake because our products became highly priced and competitors will provide cheaper goods, but that is not correct," Ezz said. "The competitiveness of Egyptian products remains the same, because the Euro plummeted against the dollar and the yen as well, so competing products will not necessarily be cheaper." Moreover, Ezz claims that even if Egyptian exports are slightly affected, the overall impact of the crisis is positive, because the imports sector is believed to be profiting. "Since Egypt's imports from the EU are more than its exports, we are making more profits overall." The EU is the biggest market for Egyptian exports and is considered Egypt's largest trading partner. According to the European Commission website, EU goods exports to Egypt in 2009 amounted to 12.6 billion Euros, equivalent to LE87.4 billion. Egyptian goods exports to EU in the same year totalled six billion Euros, equivalent to LE41.3 billion. Ahmed Sheiha, head of the Importers' Division at the Cairo Chamber of Commerce, agrees that the lower Euro rate is benefiting importers, but plays down the magnitude of the profits they are making. "Importers are definitely making more profit than pre-crisis, but it's not that much of a difference," says Sheiha. "The Euro slide is about 10 per cent only; it would have been of a serious effect if the slide was 30 per cent or more." At the end of May, the Euro reached as low as $1.22, or LE6.9, with experts predicting it would sink to reach parity against the dollar -- a case that was last seen in July 2002. In the end, it seems that foreign exchange companies are those who have suffered the most. "We suffered serious losses," Ahmed Qotb, Rawda Exchange Company manager, said furiously. "I bought a large amount of Euros just before it started sinking fast." "Some Egyptians hold onto every Euro they have, believing it would surge soon," said Hossam Kamel, Cairo International Exchange Company manager. "The demand on Euros has become very weak; buying and selling of the European Union currency is very rare, never like before the crisis," Kamel said, adding that all exchange companies are familiar with this situation, because people now prefer the safe haven status of the dollar. Experts believe that EU efforts to handle its currency crisis, which in turn resulted in the depreciation of the Euro, will eventually work, because of the strong economies of some European countries, such as Germany and France, which made a fast recovery during the last global recession. Ezz predicts a back-to-normal status for the Euro in the near future, because the EU market -- in his opinion -- has started to gain trust and confidence leading it to gradual stability.
