Cash-strapped Egypt allows its currency to fall sharply against dollar, hikes interest rates
The Egyptian pound has slipped sharply against the dollar after Egypt’s central bank raised its main interest rate and said it would allow the currency's exchange rate to be set by market forces
CAIRO (AP) — The Egyptian pound slipped sharply against the dollar on Wednesday after Egypt’s central bank raised its main interest rate and said it would allow the currency's exchange rate to be set by market forces.
The measures by the Central Bank of Egypt were meant to combat inflationary waves and attract foreign investment as the country experiences a staggering shortage of foreign currency.
Following the central bank announcement, commercial banks were trading the U.S. currency at more than 47 pounds by midday Wednesday, up from about 31 pounds per dollar.
The central bank increased the key interest rate by 600 basis points to 27.75%. The overnight deposit and lending rate were also raised by 600 basis points to 27.25% and 28.25% respectively, the bank said in a statement.
