Egypt considers dollar alternatives for trading commodities

Egypt is strongly considering approving the currencies of its commodity trade partners, including China, India and Russia to try to lessen the need for dollars, Supply Minister Ali Moselhy told reporters on Saturday.

“We are very, very, very strongly considering to try and import from countries and approve (use of) their local currency with the Egyptian currency,” said Moselhy.

“This hasn’t happened yet but it’s a long journey that we’ve already made progress on, whether with China or India or Russia, but to this moment no deal has been made,” he added.

The dollar’s decades-old dominance has been called into question in recent months as global oil traders have sought payments in currencies other than the dollar.

The shift has been driven by Western sanctions on Russia and in countries, such as Egypt, that have a shortage of dollars.

Earlier this year, Russia added the Egyptian pound to its exchange rate list, but several local traders told Reuters that have to conduct non-dollar transactions.

Egypt, a major buyer of basic commodities, has suffered a foreign currency crunch that sent its pound falling by nearly 50 percent against the dollar, suppressed imports, and pushed official headline inflation to 32.7 percent in March, shy of an all-time record.

Egypt’s strategic reserves of wheat, vegetable oils, sugar, rice and livestock stand at 2.6, 4.3, 4.0, 3.7 and 1.7 months, respectively.

Moselhy said livestock imports from Sudan, which is embroiled in a conflict between rival military forces, are expected to continue despite logistical challenges, but the ministry will try to diversify import origins, including from Chad and Somalia.

The ministry had procured 365,740 tonnes of local wheat in the local harvest season that started mid-April, Moselhy said. The ministry’s target for the season is 4 million tonnes, he added.

Earlier this month, the supply ministry restricted the trading of local wheat without ministry approval, as well as the use of wheat as feed.