The Egyptian pound has lost two-thirds of its value at the present time since early 2022 (Reuters)
The Egyptian pound stabilized at about 49.5 pounds to the dollar as the market opened on Thursday, a day after the Central Bank allowed the currency to depreciate and pledged to shift to a more flexible exchange rate system in conjunction with Egypt signing an expanded loan program worth $8 billion with the International Monetary Fund.
Data from the London Stock Exchange Group showed that the pound remained in the same range at which it stabilized near yesterday’s close, Wednesday.
Before the devaluation of the currency and the significant increase in interest rates on Wednesday, the central bank kept the currency for about a year at a price of just under 31 pounds to the dollar.
A more flexible exchange rate - a key demand of the International Monetary Fund for a long time - is crucial to restoring investor confidence in the economy, which has faltered over the past two years due to a shortage of foreign currency, according to Reuters.
Egypt pledged to take this step before, but it resumed keeping the price of the pound at a fixed level.
The Central Bank of Egypt says that sufficient funding has been secured to ensure foreign exchange liquidity, and Central Bank Governor Hassan Abdullah told reporters - yesterday, Wednesday - that the bank has the ability to intervene based on market rules, as central banks in any country have the right to intervene if... There are illogical movements.
The International Monetary Fund - which agreed to add $5 billion to the current $3 billion loan program with Egypt - said it was looking forward to a sustainable move towards a unified market-determined exchange rate.
The Egyptian pound stabilized at a level below $50, which it exceeded yesterday, Wednesday, after its price was liberalized (Al Jazeera)
Under the programme, Egypt is committed to undertaking structural reforms to achieve price stability, manage the debt burden and encourage private sector growth.
The devaluation of the actual pound and the agreement with the International Monetary Fund come two weeks after Egypt signed an investment deal with the UAE.
Egypt says the deal will bring investments worth $35 billion within two months, including the transfer of $11 billion from already existing deposits.
Foreign currency shortages have curbed local trade activity, a backlog of goods at ports and delays in payments for primary goods.
Remittances from Egyptians working abroad - the country's largest single source of foreign currency - slowed sharply last year, amid expectations of a decline in the pound.
So far since early 2022, when foreign currency shortages worsened, the pound has lost more than two-thirds of its value against the dollar in a series of currency devaluations.
Source: Reuters