The Central Bank of Egypt raised its policy rate by 600 basis points to 27.25 percent.
The bank also took the step of “shifting from a fixed exchange rate to a floating exchange rate regime”, which the International Monetary Fund (IMF) required for the new loan.
The dollar/Egyptian pound exchange rate rose gradually from 30.9 to 44.7 this morning. Thus, the official exchange rate increased by about 45 percent this morning.
The Central Bank of Egypt said in a statement today that it will allow the exchange rate to be determined by market forces, aiming to move towards a single exchange rate by aligning the parallel rate with the official rate.
This morning’s devaluation was the fourth devaluation in Egypt in the last two years.
Annual consumer inflation in Egypt had risen to nearly 30 percent.
With the UAE’s decision to invest $35 billion and send cash foreign currency, the black market exchange rate had fallen from the 60s to the 40s.
