The effect of Exchange Rate volatility on Egypts Inbound Tourism
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Abstract
Exchange rates in Egypt have always been considered a key indicator in the Egyptian economy throughout the past years. It was the main concern of the consecutive governments to stabilize value of the Egyptian Pound against the foreign currencies, especially US Dollar. The exchange rate in Egypt has been characterized by rigidity for several decades. The Egyptian Pound has passed through a series waves of floatation against the US Dollar since 1977 until 2016. All these waves have left its impact on the Egyptian economy in general and tourism industry in specific. In fact, several studies proved that local currency devaluation stimulate tourist flow to destinations, while in the origin might hinder the outbound tourism flow. Egypt has adapted a massive economic reform programs to stabilize the economy and stimulate economic growth. This was through a set of recovery plans to remedy macroeconomic disparities, through exchange rate floatation, fiscal consolidation, plus structural reforms in energy sector. These reforms have definitely impacted the tourism industry. Egypt has been recorded by WTTC as the first African economy regarding tourism activity in 2019, because Tourism contributed to about US$29.5 billion of Gross Domestic Product (GDP). Moreover, this research aims to investigate the impact of exchange rate volatility on the inbound tourism in Egypt through the period from 1989 to 2019. This research will examine whether the exchange rate volatility is directly related to increasing the number of inbound tourism or not. The research address the extent of the causal relationship using regression analysis for the five tourist generating regions. Since the research examines a causal relationship regression analysis was selected.
Keywords
Exchange Rate Volatility, Egypt, Inbound Tourism, Regression Analysis
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