The Egyptian pound slipped further against the dollar on Wednesday, after Egypt’s Central Bank raised its main interest rate and devalued the local currency by 14%.
The moves by the Central Bank of Egypt came to face inflationary pressures triggered by the coronavirus pandemic and Russia’s war in Ukraine, which hiked oil prices to record highs.
Banks were selling the US currency at more than 18.5 pounds while buying it at over 18.45. That’s up from an average of 15.6 pounds for $1 before the central bank’s decision on Monday.
The central bank increased the key interest rate by 100 basis points to reach 9.75%. The overnight deposit and lending rate were also raised by 100 basis points each to reach 9.25% and 10.25% respectively, the bank said.
The bank citied the war in Ukraine that has shaken the global economy and threatened food supplies and livelihoods of people across the world.
Economists have said the moves were likely signs that the government is working to secure another financing package from the International Monetary Fund, according to The Associated Press.
Over the past weeks, residents have reported rises in the price of bread, fresh vegetables and fruits due to higher transport costs.
On Tuesday, Prime Minister Mustafa Madbouly said they were working on reconstructing the 2022-2023 budget to be prepared for “the most pessimistic scenarios.”
He said the main priority for the government is to provide primary commodities to citizens, highlighting the decisions and incentives announced recently to support local farmers to increase wheat production.
The state's top priority now was to ensure the availability of essential commodities and food products in the markets and continue efforts related to controlling market prices, said the Prime Minister.
According to Madbouly, the Russia-Ukraine crisis has placed inflationary pressures on the world, especially on fuel and food prices.
Separately, Madbouly received Deputy Chairman of Abu Dhabi Co-operative Society Saeed Eid Saeed al-Ghafli, accompanied by an Emirati delegation.
Ghafli lauded deeply-rooted relations between the two countries, which positively impacted the economic and commercial cooperation between the two countries.
He expressed his company's keenness in investing in the retail sector in Egypt.
Madbouly, in turn, praised deeply-rooted relations between the two countries at the popular and presidential levels, calling for promoting bilateral cooperation in various fields, particularly in the economic sector.
The premier welcomed initiatives to strengthen cooperation frameworks and encourage more investments between the two countries.