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Foreign exchange pressures on Egypt likely to continue for years

The flexible policy recommended is bringing the currency exchange rate closer to the local currency's real value determined by strength of economy.
20.10.15 | Source: All Africa

The recurring depreciation of the Egyptian pound by the Central Bank of Egypt (CBE) throughout 2015 comes in line with recommendations by the world's largest global financial institutions to adopt a flexible exchange rate policy, one that will exert pressure on Egypt's foreign reserves for years to come.

Since January, the Egyptian pound has lost 79 piasters against the dollar, taking the currency's decline to the year to 11 percent.

Both the International Monetary Fund (IMF) and the World Bank have advised Egypt to adopt such a "flexible" policy, in light of the domestic and international economic slowdown.

The most recent depreciation by the Egyptian central bank was on Sunday and was the second in less than a week.

While the CBE does not disclose the measures it takes to stabilise the currency, since December 2012 it has been regulating the currency exchange rate by selling dollars to commercial banks in public auctions.