The underlying study focuses on assessing the real exchange rate in Egypt during the period 1999-\n2012. In particular, the paper estimates the Real Exchange Rate (RER) misalignments in Egypt during\nthe period under investigation. This is implemented through carrying out two main steps: first, the\nobserved real exchange rate is calculated. Then, the Equilibrium Real Exchange Rate (ERER) is\nestimated using three different techniques from the methodology spectrum of the empirical literature.\nThese methodologies are widely used to estimate the ERER in both developing and developed\ncountries alike; namely, the Purchasing Power Parity (PPP) approach; the Fundamental Equilibrium\nExchange Rate (FEER) approach and Edwards Model (1989). Fortunately, the three techniques yield\nconsistent results concerning the undervaluation and overvaluation episodes. Evidently, the REER\nappears to be misaligned during the period 2001-2009: undervalued during 2003-2007, overvalued 2001-\n2002 and 2008-2012. The paper concludes that the Egyptian Pound is recently overvalued; although all\nthe applied approaches indicate different misalignment magnitudes, they all show a growing trend in\nthe relative prices in favor of our trading partners. It is recommended to narrow down these deviations;\nthe REER has to be devaluated by a range of 9 to 13 percent in order for the Egyptian products not to\nlose their competitiveness in the international markets.
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