CAIRO (Al Jazeera) – Egypt’s currency hit a record low on Thursday, reaching over 23 pounds to $1 as the country secured a new loan from the International Monetary Fund (IMF).
The rapid dip from the opening level of 19.67 EGP to the dollar came after the central bank raised interest rates by 200 basis points as a part of a new exchange rate regime.
The central bank said it was set on intensifying economic reforms, and had “moved to a durably flexible exchange rate regime, leaving the forces of supply and demand to determine the value of the EGP against other foreign currencies”.
The policy shift came in a bid to secure a new loan from the IMF after Egypt’s economic woes deepened due to the war in Ukraine. The fund has long been urging Egypt to allow greater exchange rate flexibility.
Against the backdrop of the 15 percent currency depreciation, the government said it had clinched a $3bn loan agreement with the IMF over the next three years and eight months.
The IMF confirmed the deal and welcomed Egypt’s exchange rate regime changes and commitments to boosting social protections.
“The commitment to durable exchange rate flexibility going forward will be a cornerstone policy for rebuilding and safeguarding Egypt’s external resilience over the long term,” the IMF said in a statement.
The central bank had allowed the pound to depreciate by 14 percent in March, and the currency had been slipping more gradually in recent weeks ahead of Thursday’s sudden fall.