March 6, 2024 (EIRNS)—In what is called an unexpected move, the Egyptian Central Bank announced this morning that it will allow market forces to set the Egyptian pound exchange rate. By this afternoon Egypt sign an $8 billion loan agreement with the International Monetary Fund. While the decision might have been unexpected, the result was what could be expected, that the Egyptian pound plunged, falling by 62% against the U.S. dollar, reaching approximately EGP 50.1 to the dollar and EGP 54.5 to the euro. This is a de facto devaluation, the fourth in less that two years. Furthermore, the Central Bank increased overnight interest rates by 6 points to 27%, the second hike this year, reports Al Ahram.
The move was obviously one of the conditionalities demanded by the IMF as part of concluding a new loan agreement that had been under negotiation for the last months. The agreement was announced in a press conference attended by Egyptian Prime Minister Mostafa Madbouly, Central Bank Governor Hassan Abdullah, and a representative of the IMF.
