Egyptian Pound Weakens as Local Lenders Clear More FX Requests
Egypt’s pound weakened to more than 49 per dollar for only the second time since the North African nation enacted a sharp devaluation in March.
The currency is now trading locally at about 49.14 to the greenback, extending losses that began modestly in October before deepening last Thursday.
The pound’s decline to its weakest since mid-August followed increased demand for dollars after lenders cleared more requests for foreign exchange, according to people working in the banking sector. They asked not to be identified as they lacked authorization to speak publicly.
Egypt let the pound plunge nearly 40% to about 50 per dollar eight months ago in a bid to stem a two-year economic crisis, helping unlock an expanded $8 billion International Monetary Fund loan that’s part of a vast global bailout.
Before Thursday, banks had to obtain central bank approval to give dollars to some sectors of the economy, according to the people. Now lenders can supply without an initial consultation, but need to subsequently inform the central bank of the amount provided, they said.
The Egyptian currency has seen long periods of stability since June, averaging about 48 per dollar. There was an exception in August, when the pound temporarily edged past 49 amid a broader emerging market selloff.
The latest decline comes after IMF chief Kristalina Georgieva visited Cairo to discuss an Egyptian reform program that authorities have indicated they may wish to partially revise.
An IMF mission is due to start talks Tuesday with Egyptian officials on the fourth review of the program. Topics are likely to include their progress on maintaining a flexible exchange rate, a pillar of the IMF agreement that the lender says is key to protect the economy from external shocks.
The pound slightly depreciated for most of October, reflecting some outflows from portfolio investors spurred by regional upheaval. Egypt had already devalued the currency three times between early 2022 and March, causing surges in living costs for the country of 107 million people.
