Egypt central bank chief hints at another devaluation

Egypt’s central bank Governor Tarek Amer said the focus on defending the pound over the past five years was a “grave mistake,” signaling the possibility of another devaluation after he weakened the currency by 13 percent in March. Amer, who took office in November, outlined views on the currency, the economy and monetary policy in three separate newspaper interviews published Sunday. He said authorities can no longer delay measures that would control the use of foreign currency. Under his leadership, the central bank is focusing on reviving the economy rather than stabilizing the exchange rate, he said.

“We have two choices: either keep the pound stable or get factories working,” Amer told the Cairo-based daily Al-Mal. The exchange rate should reflect market and economic forces, he said.

“I will take what I think are the right decisions, in my view, and bear the responsibility.”

The biggest one-time devaluation since 2003, which Amer described as a “corrective move,” has failed to rein in a thriving black market, undermining the central bank’s efforts to attract investments that would bolster its reserves and make more hard currency available for businesses. The pound is trading at a discount of almost 20 percent to its official rate versus the dollar, according to Bloomberg surveys.