The Central Bank of Egypt announced on Thursday (27) that it has switched to a flexible exchange rate regime, “letting the forces of supply and demand determine the value of the Egyptian pound against other foreign currencies”. The measure caused a sharp devaluation of the currency against the dollar.
According to a statement released by the BC, the objective is to prioritize price stability and build sustainable and adequate levels of exchange reserves. “The global economy has faced various shocks and challenges, the likes of which have not been seen in years. Recently, global markets have been subject to the Covid-19 pandemic that has put the world on lockdown, followed by the conflict in Ukraine, which has had dire economic ramifications.”
In this scenario, the BC says that Egypt intends to intensify its reform agenda “to ensure macroeconomic stability and achieve strong, sustainable and inclusive growth”.
In addition to the exchange rate change, the central bank held a special meeting, in which it decided to increase the deposit rate overnightthe loan rate overnight and the main transaction rate by 200 basis points to 13.25%, 14.25% and 13.75%, respectively. The discount rate was also raised by 200 basis points to 13.75%.
Source: CNN Brasil
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