Egypt devalued the pound by nearly 50%

The decision to simultaneously liberalize the national currency is part of the “own program of reforms, supported by the international community,” said the Egyptian Central Bank. The country expects loan of $12 billion from the International monetary Fund (IMF), which earlier urged the Egyptian authorities to adjust the exchange rate policy.

The Central Bank set the reference exchange rate at 13 pounds for $1, plus/minus 10%. Prior to this official rate was fixed at 8.8 pounds for $1. However, the purchase of dollars in Egyptian banks oriented toward the official rate was strictly rationed, and local businesses increasingly used the “black market” currency. There this week the dollar was worth a record 18 pounds, which is twice more expensive than on the official market.

At 14:00 GMT the Egyptian Central Bank will hold a foreign exchange auction, the results of which will be determined by the market rate of the Egyptian pound for the first time in decades. The Central Bank noted in its statement that its goal is “to put an end to the” unofficial currency exchange market.

“Free floating pound is a wonderful, long-awaited step, which we, thank God, decided,” — wrote in his Twitter Egyptian billionaire Naguib Sawiris. “Once you have a floating exchange rate, the gap between the official and unofficial exchange rates is decreasing fast enough, unless the government intervenes, which it should not do”, — told Bloomberg the asset Manager in the Dubai investment Bank Al Mal Capital PSC Tariq kakish.