Egypt’s pound currency dropped by around 4 percent to EGP 24 against the U.S. dollar as trading resumed on Sunday, after the central bank announced last week adopting a flexible exchange rate.
The pound fell 14.5 percent to 23 against the dollar on Thursday after the central bank pledged a “durably flexible” exchange rate in conjunction with a staff-level agreement for a $3 billion extended fund facility reached with the International Monetary Fund (IMF).
The Egyptian currency has been held steady or allowed to depreciate only gradually following previous sharp devaluations in 2016 and March of this year. It has weakened about 34.5 percent against the U.S. currency so far this year.
Egypt has been struggling to cope with the spillover of the Russian war in Ukraine, which led to rapid outflows of portfolio investments, an increase in the commodity import bill and a fall in tourism revenues. This drove authorities in Egypt to introduce a mandatory requirement for importers to use letters of credit. The central bank has said last Thursday that requirement will be gradually phased out by December.
