CAIRO, The Egyptian pound further weakened against the U.S. dollar, whose exchange rate jumped yesterday from about 24.7 to about 26.49 pounds, according to data on the website of the Central Bank of Egypt (CBE).
It is the largest single-day decline of the Egyptian pound’s value, since the CBE allowed it to drop by about 14.5 percent in late Oct, 2022. The country devalued its currency twice in 2022.
The move complies with the country’s “shift to a durable exchange rate regime,” to contain inflation as a key demand of the International Monetary Fund (IMF), which recently approved a loan of three billion dollars to Egypt, to support its economic and structural reforms.
The IMF’s support package also includes measures to be implemented by Egypt, to “reduce the state’s footprint” and “facilitate private-sector-led growth.”
Earlier yesterday, Egypt’s two main national banks, Banque Misr and the National Bank of Egypt, offered certificates for one-year savings, with a record-high 25-percent interest rate, a move that usually signals a devaluation of the local currency.
Over the past year, Egypt has been facing increasing inflation, which was driven by the global hike of food and energy prices. The country’s annual urban consumer inflation rate surged to 18.7 percent in Nov, 2022, marking the highest in nearly five years.
In Dec, 2022, the CBE announced raising the interest rate by 300 basis points, to contain soaring inflation, increasing the deposit rate to 16.25 percent and the lending rate to 17.25 percent.
Raising interest rates aimed “to contain inflationary pressures and to steer annual headline inflation rates towards its targeted levels,” Egypt’s central bank explained.
Source: Nam News Network