Report: Egyptian Pound Reaches New Low Against US Dollar Despite Flexible Exchange Rate Regime

The speech complaint of the Egyptian lb versus the U.S. dollar fell to a caller debased connected Jan. 11 aft it tapped 32.14 per greenback. The currency’s latest important depreciation came conscionable a fewer months aft it adopted a flexible speech complaint regime. According to the International Monetary Fund, the monetary authorities successful Egypt person pledged not to intervene successful currency markets.

Flexible Exchange Rate Regime

Just a fewer months aft plunging by much than 15% versus the U.S. dollar, the Egyptian pound tapped a caller debased of much than 32 units per greenback connected Jan. 11. According to a Reuters report, the pound’s latest depreciation has prompted immoderate analysts to question the grade to which the cardinal slope wants the lb to fall.

EGP/USD connected Jan. 15, 2023.

As reported by Bitcoin.com News successful October 2022, the pound’s authoritative speech complaint versus the dollar fell from conscionable nether 20 units per dollar to 23.09 per dollar aft Egyptian monetary authorities agreed to wantonness the fixed speech complaint regime. In return, Cairo would person a $3 cardinal fiscal bundle from the International Monetary Fund (IMF).

Following the currency’s latest fall, immoderate Egyptian analysts quoted successful the Reuters report believed the lb had reached its little limit. Others similar Farouk Soussa of Goldman Sachs said it is inactive hard to reason that the lb versus the dollar speech complaint had reached an equilibrium.

“When portfolio investors commencement to travel backmost in, that is erstwhile the marketplace volition person judged equilibrium. But determination is nary nonstop mode of observing equilibrium,” Soussa reportedly said.

Monica Malik, an economist astatine the Abu Dhabi Commercial Bank said the pound’s latest plunge unsocial does not warrant that investors volition return. The economist said clearing the overseas speech backlog whitethorn beryllium 1 measurement that reassures investors. However, this requires caller USD liquidity and according to Malik “there is presently nary visibility wherever this liquidity volition travel from.”

Meanwhile, successful the IMF’s Egypt unit state report, the planetary lender revealed that the authorities successful Cairo had promised not to intervene successful currency markets. As per its statement with the planetary lending institution, Egyptian monetary authorities would lone intervene successful cases of excessive volatility.

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