The Egyptian pound witnessed a historic low on Wednesday, hitting LE30 versus the US dollar in the money markets.
Egypt devalued its currency by 48 percent in 2016, allowing it to float freely in order to meet a key demand by the International Monetary Fund (IMF) and secure a three-year US$12 billion loan from the fund.
“Egypt devalued its currency twice in 2022, with a pledge in October to adopt a flexible exchange rate policy eventually helping the country to clinch a $3 billion loan from the IMF,” according to Bloomberg.
Egypt’s IMF-supported program presents a comprehensive policy package to preserve macroeconomic stability, restore buffers, and pave the way for inclusive and private-sector-led growth.
The package includes a durable shift to a flexible exchange rate regime, monetary policy aimed at gradually reducing inflation, fiscal consolidation to ensure downward public debt trajectory while enhancing social safety nets to protect the vulnerable, and wide-ranging structural reforms to reduce the state footprint and strengthen governance and transparency.
Under the Sisi regime, the country has obtained loans from the IMF, amounting to about $20 billion since 2016, as part of the implementation of the economic and social reform program.
The Central Bank of Egypt (CBE) announced on Tuesday that the annual headline inflation rate increased to 24.4 percent in December 2022, in comparison to 21.5 percent in November of the same year.
The CIB also announced Tuesday, that it would raise the interest on Certificates of Deposit (CDs) for a year and a half.
The move makes CIB the third bank to raise the interest rate on CDs after the decision of Banque Misr and the National Bank of Egypt to raise the interest to 22.5 percent as a monthly return and 25 percent as an annual return.
The CBE stated that raising the interest rate that went up by three percent came after global commodity price expectations declined slightly.
This is compared to expectations presented to the Monetary Policy Committee at its previous meeting.
Many central banks abroad have now signaled that inflation rates may have peaked and begun to decline.
The Monetary Policy Committee of the Central Bank of Egypt has raised the overnight deposit rate, overnight lending rate, and the rate of the main operation to 16.25 percent, 17.25 percent, and 16.75 percent respectively.
Meanwhile, the discount rate was also raised by 300 basis points to 16.75 percent.