Egypt’s central bank likely to peg pound against currency basket in early 2024: MP

In October 2022, the CBE’s acting governor Hassan Abdalla announced that Egypt was working on setting an index for the pound that would be linked to a basket of gold and other currencies besides the US dollar.

The currency basket could include the US dollar, euro, yen, sterling, or even the yuan, El-Fiqi added during an interview on Egyptian TV channel DMC.

Currency pegging is a policy that attaches the exchange rate of a currency to the value of a group of currencies in a basket with each of them represented by a fixed weight. 

He said that Egypt has already fulfilled its commitments to the IMF by devaluing the pound three times since March 2022, which sparked a wave of inflation that urged the CBE to increase interest rates by 11 percent.

According to the CBE’s exchange rate data, the USD, euro, and sterling equal EGP 30.82, EGP 32.45, and EGP 37.51, respectively.

Egypt is currently under review for the loan agreement with the IMF. The first review, initially scheduled for 15 March, has not occurred yet.

The country’s annual headline inflation decelerated in September to 38 percent, down from the 39.7 percent it reached in August, according to official data.

Devaluation not close
 

At odds with the reports and the forecasts of a potential devaluation before the end of 2023, El-Fiqi noted that there will not be another devaluation before the presidential elections wrap-up in December.

International credit rating agency Fitch Solutions expected that the Egyptian pound will be devaluated by 18.6 percent to reach around EGP 38 against the US dollar by the end of the year.