Egyptian pound stable after devaluation, IMF deal

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Egypt’s currency remained stable at around 49.5 pounds to the dollar as the market opened on Thursday, following the central bank’s decision to let the currency plunge and shift to a more flexible exchange rate system.

The move came as Egypt secured an expanded $8 billion program with the International Monetary Fund (IMF).

The pound maintained the same range it settled at near closing on Wednesday, according to LSEG data. Before the devaluation and interest rate hike on Wednesday, the central bank had held the currency at just under 31 pounds to the dollar for about a year.

A more flexible exchange rate has been a long-standing demand from the IMF, seen as crucial for restoring investor confidence in Egypt’s economy, which has been grappling with a foreign currency shortage for the past two years. While Egypt has promised such moves in the past and then returned to holding the currency at a fixed rate, the central bank now emphasizes that sufficient funding has been secured to ensure foreign exchange liquidity.

Source: REUTERS

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