Egyptian Pound Tumbles 16% to Dollar

22/03/2022

The Egyptian pound shed 16 percent of its value against the US dollar on Monday to stand at 18.171, compared with 15.661, the Central Bank of Egypt's (CBE) data showed.

This is the pound's lowest value since February 7, 2017, when the pound hit 18.288 against the greenback.

The move comes as the central bank allowed a devaluation of the local currency to occur in order to absorb the economic shock triggered by the Russian-Ukrainian war.

Egypt's Central Bank Governor Tarek Amer told a press conference the Egyptian pound had undergone a "correction" that reflected world and local developments in an expected move to help preserve foreign currency liquidity.

"This is a good move to make as the devaluation of the pound moves it roughly in line with its fair value and it could pave the way for a new IMF deal," James Swanston of Capital Economics was quoted a saying by Reuters.

"However, it will be key whether policymakers now allow the pound to float more freely or continue to manage it and allow external imbalances to build up once more, possibly resulting in future step devaluations like today's," Swanston said.