Egypt Watch

US dollar exchange rate hikes anticipating new devaluation of the pound

In anticipation of a new float for the local currency, the exchange rate of the Egyptian pound decreased further in the parallel market as the US dollar approached 33 Egyptian pounds.

In November, the annual inflation rate spiked to 19.2%. Due to increasing inflation, experts predicted that the Egyptian Central Bank would raise interest rates.

The Egyptian government will meet representatives of the International Monetary Fund on December 15th to discuss a new aid package. “The International Monetary Fund may need more proof that Egypt has adopted a flexible exchange rate,” said an Economic analyst at Columbia Threadneedle Investments Gordon Powers. According to JPMorgan, the high financing needs of Egypt and the limited market flows could expand the country’s financing gap and affect its foreign exchange reserves.