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Egypt Devalues Currency, Introduces Flexible Exchange Rate

March 6, 2024
Image Credit: Wikimedia Commons

Egypt’s central bank (CBE) devalued the Egyptian Pound ​​and introduced a flexible exchange rate system determined by market forces following an unscheduled Monetary Policy Committee meeting on 6 March.

“To ensure a smooth transition, the CBE will continue to target inflation as its nominal anchor, allowing the exchange rate to be determined by market forces,” the central bank said in a press release.

The currency is currently being traded at around EGP 45 per USD as of this article.

The move came minutes after the CBE raised interest rates by 600 basis points for its overnight deposit rate, the overnight lending rate, and the rate of the main operation, which now stand at 27.25 percent, 28.25 percent, and 27.75 percent, respectively.

Highlighting the importance of exchange rate unification, the central bank underscored its role in streamlining the elimination of foreign exchange backlogs.

The decision marks a significant departure from Egypt’s previous exchange rate policy and underscores the central bank’s commitment to implementing measures aimed at stabilizing the economy and mitigating inflationary risks.

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