Thursday, February 03, 2011

What's the price of a loaf of bread in Cairo?

I was wondering if anyone knew what was happening to the price of goods in Cairo.

The Egyptian Pound is off just a few % from November, and, if the country is experiencing inflation it cannot be because 1) the central bank is flooding the financial system with too many reserves or 2) the deficit is too big.

Either way, I'm probably looking at this incorrectly as it's pegged to the US$ anyway (as are many Arab currencies) so they aren't running a true fiat regime.
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2 comments:

  1. Ramanan7:37 AM

    The IMF calls the Egyptian Pound de jure floating. http://goo.gl/DEsRz

    The 2007 report called it a "conventional peg" and 2008 managed floating. If you see the Google Finance graph for the last 5-6 years you can see this.

    Don't see the direct connection between the exchange rate in the price of goods. I mean they are related in a complicated manner but in this case why did you bring the two together ?

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  2. winterspeak8:12 AM

    Ramanan:

    No good reason. I just have no idea what's happening to CPI in Cairo and thought this might shed some light. It was probably a dumb idea.

    My broader point was that ultimately, fiat currency is a manifestation of sovereign power.

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