Egypt’s Sisi Says Flexible Currency Is Possible with New Financing

An employee counts Egyptian pounds at a foreign exchange office in central Cairo, Egypt, March 20, 2019. (Reuters)

Egyptian President Abdel Fattah al-Sisi said on Saturday that with tens of billions of dollars in new financing from the United Arab Emirates and the International Monetary Fund, moving to a flexible exchange rate would be possible.

The comments were Sisi's first public remarks since Wednesday, when Egypt let the pound drop to just under 50 pounds to the dollar from 30.85 pounds - the latest in a series of devaluations since early 2022.

The central bank said it would let the exchange rate be determined by market forces except in cases of excessive volatility, and that it had sufficient liquidity to move to such a system after having held the pound steady for about a year.

Sisi said he had stopped the pound currency from floating last year for national security reasons because a large amount of funding was needed before making such a move.

In late February, Egypt announced a deal with Emirati sovereign wealth fund ADQ that would bring in $35 billion over two months, including $11 billion converted from existing deposits.

On Wednesday, as they let the pound depreciate sharply, authorities announced an agreement with the IMF to increase Egypt's current loan and economic reform program with the fund to $8 billion, from $3 billion previously.

Egypt is also seeking $1.2 billion from the IMF's Resilience and Sustainability Trust for vulnerable low or middle-income countries.

"If I have this sum and can achieve flexible exchange rate determined by demand, then I can make it," Sisi said during comments at an event in Cairo, referring to the total inflows.