The Egyptian pound fell by another 1%, on Tuesday, a day after the country devalued the local currency by 14%, while the Egyptian government announced a restructuring of its budget in a sign that it may prepare for a new financing package with the International Monetary Fund.

The Egyptian economy was hit after Russia's war on Ukraine prompted foreign investors to flee emerging markets.

Russia and Ukraine were also major exporters of wheat to Egypt and major sources of tourism.

Refinitiv data showed that the Egyptian pound fell to about 18.45 per dollar this morning, Tuesday, from 18.27.

As of Monday, the currency was valued at 15.7 per dollar, a level at which it has remained almost stable for most of the time since November 2017.

The latest devaluation has sent the pound down more than 15% since yesterday morning, close to the level that some analysts thought was its true value.

Yesterday, the Central Bank of Egypt raised the key overnight interest rates by one percentage point, and stressed the importance of exchange rate flexibility.

"This will be in line with what is needed...to most likely reach another IMF program, especially given that it will be in light of exceptional access to IMF resources," JP Morgan said in a note.

A step that paves the way for additional support for Egypt

"We agree with consensus that this is a move that the IMF would welcome, and may pave the way for some additional support from the Fund over the next month or two," Renaissance Capital said in a note.

The Egyptian government confirmed today that it aims to achieve a primary surplus equivalent to 1.5% of GDP in its budget for the fiscal year that begins in July, and a total deficit of 6.1%.

The Egyptian government also expected GDP growth of 5.5% in 2022/23, down from 5.7% forecast by the Ministry of Finance in January.

State-owned banks began selling one-year certificates of deposit to the public at a return of 18%, a move analysts said was partly aimed at absorbing liquidity and curbing inflation, which is expected to jump to more than 10% after the currency devaluation.

A package of measures in Egypt to ease economic pressures

Yesterday, the Egyptian government announced a 130 billion Egyptian pound ($7.05 billion) economic pressure relief package, a move analysts said appeared aimed at winning support from the International Monetary Fund.

Egypt has resorted to the IMF 3 times in the past few years:

  • It borrowed $12 billion under the Extended Fund Facility in November 2016.

  • And $2.8 billion under the Rapid Financing Instrument agreement in May 2020.

  • and $5.2 billion under the Stand-By Agreement in June 2020.


Egypt is eligible for a new version of any of the three financing programmes, according to a source familiar with its discussions with the International Monetary Fund.

But as it exceeds its normal borrowing quota, it will have to meet exceptional criteria to obtain financing, which means it will be subject to a greater level of scrutiny, the source said.

Sudanese pound falls to a record level

Meanwhile, chaos pervaded the parallel currency markets in Sudan, on Tuesday, and the Sudanese pound against the dollar recorded a record deterioration.

A currency dealer told Anatolia, who asked not to be named, that the selling price of the dollar exceeded 700 pounds, compared to 675 pounds on Monday evening.

The trader added that the selling prices of the dollar started today at 680 and has now reached 715 pounds, and it changes around the clock.

He pointed to a significant increase in the demand for the dollar due to the loss of confidence in the Sudanese pound, and the average selling price of the dollar in Sudanese banks amounted to 640 pounds.

At the beginning of this March, the Central Bank of Sudan decided to liberalize the exchange rate of the Sudanese pound against the dollar, and relinquished its responsibility for setting the price for banks and exchange companies to announce the prices of buying and selling free currencies without the intervention of the Central.

The banks set the price of 530 pounds to the dollar after the liberation decision, while prices in the parallel markets amounted to 575 pounds.