International Monetary Fund officials said that the Central Bank of Egypt is committed to allowing the exchange rate to reflect the conditions of supply and demand for foreign currencies.
According to the IMF, the fund-supported program with Egypt helps to avoid imbalances in the demand for currency in Egypt, achieves flexibility in the exchange rate, confronts external shocks, and encourages more investment.
IMF officials stated that when Egypt fixed the exchange rate during the past years, this negatively affected the market’s performance, and led to accumulations in the demand for the currency, which resulted in economic obstacles during 2022.
The Central Bank of Egypt may sometimes intervene in times of excessive volatility in exchange rates, the officials added, without resorting to using the net foreign assets of banks, with the aim of stabilizing the exchange rate.
The new financing from the International Monetary Fund to Egypt will stimulate more foreign investments in Egypt, in addition to selling some shares of government companies, the IMF explained.