Egypt plans to put a stop to dollar peg

Egypt plans to develop a new indicator for its currency to be linked to a basket of gold and other currencies besides the US dollar, the new Central Bank Governor said, local news agencies report.

“Since Egypt is a non-oil exporter, there was no need to peg its local currency to the US dollar.” The Central Bank of Egypt’s (CBE) Governor, Hassan Abdalla, made this statement on Sunday at a significant economic conference in Cairo.

The CBE “is aiming to change this concept” he continued. The CBE has completed the forward contracts for the Egyptian pound, according to Abdalla.

The CBE is developing hedging contracts for local currencies as a mechanism to mitigate the effects of the Russian-Ukrainian crisis, which had an influence on the hard currency in the Egyptian market, he further stated.

The fallout from the Ukraine war, which broke out in February, has severely hurt Egypt’s economy.

According to the official exchange rate published on Sunday, the Egyptian pound traded at 19.72 for selling and 19.62 for buying in October, a record low against the dollar. To support its economy, Egypt is looking to enter into a credit agreement with the International Monetary Fund (IMF).

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