The Egyptian pound fell 13. 5% to a record level against the dollar today, Thursday, on the same day that the government announced an agreement worth three billion dollars with the International Monetary Fund, with a commitment to shift to a permanent “flexible exchange rate system”.
In a rare meeting, the central bank also increased interest rates by 200 basis points with the stated goals of stabilising inflation expectations and reducing demand pressure.
Since March, when the war in Ukraine made Egypt’s economic issues worse, it has been in negotiations with the IMF to receive a new loan. The Fund has often urged Egypt to give the exchange rate more latitude.
The fund said in a statement in which he confirmed the provision of three billion dollars over a period of 46 months, according to the so -called “facilitation of the extended fund”: The flexible exchange rate system must serve as “the cornerstone strategy to restore and safeguard Egypt’s long-term foreign flexibility.”
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He added that the agreement is expected to stimulate a large multi -year financing package, including about five billion dollars in the fiscal year ending in June 2023, which reflects “the broad international and regional support for Egypt.
The exchange rate “will reflect the value of the Egyptian pound against other foreign currencies by the forces of supply and demand within the context of a flexible exchange rate system,” according to the central bank, which also stated that it is committed to accelerating economic reforms.
According to data from Rafinitiv, the pound dropped significantly from a level of 19. 67 to roughly 22. 75 versus the dollar.
Prior to the significant decrease today, the Central Bank of the Pound had previously permitted 14% in March. Tariq Amer, the previous governor of the Central Bank, who was in his era, was abruptly ousted in August after registering more steady declines in recent weeks.
The majority of Egypt’s bonds increased by two years on the dollar today, Thursday, reaching their highest point in almost a month and rising by around 10% in price from their lowest points at the start of the month.
Following the modification of the “flexible” exchange rate mechanism, the value of the Egyptian pound declines.
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