GM temporarily halts production due to foreign currency crisis – Reuters
General Motors has temporarily suspended operations in Egypt amid an ongoing currency crisis in the North African country, Reuters reported.
Egypt, which relies substantially on imports for its food and energy needs, has been suffering from an economic crisis since the 2011 uprising. The ensuing political turmoil dealt a severe blow to foreign investment and tourism. Dollar reserves in the country have halved to $16.4 billion since then, it was reported.
Egypt’s central bank has been rationing dollars and keeping the pound artificially strong at 7.7301 per dollar through weekly dollar auctions. However, the pound is trading on the black market at much lower rates than that set by the central bank. Reuters reported this week that the black market rate was 8.72 pounds per dollar.
“The entire sector has a currency crisis,” a source at GM told Reuters. “We can’t make a car without some of the parts. We stopped production temporarily until we can clear the imports held up in customs.”
“There is still some leeway with the government and the banks to solve the issue,” the source added.
General Motors’ Egyptian operations include assembling trucks and cars. The manufacturer produces 25 percent of the country’s vehicles.