What others can learn from Egypt on float anniversary

Egypt’s transition from a struggling economy to one of Africa’s revival stories in 12 straight months is adding to evidence that a free-floating currency works. On the first anniversary of the pound’s move to market-determined rates, the signs of growth and stability are unmistakable. Economic expansion has accelerated to the fastest pace in seven years, non-oil exports and tourism are growing at double-digit rates and stocks trade near record highs. All without the central bank having to spend a fortune defending the currency.

The transition hasn’t been without risk or pain. The pound has lost half of its value since the float, sending inflation above 33 percent. Despite the mixed results, the foundations for a structural improvement in the economy have been laid and the capacity of policymakers to support growth has improved.

That’s a far cry from Nov. 3, 2016, when Egypt removed most currency restrictions to end a crippling shortage of U.S. dollars and dwindling investments. It followed a five-year struggle to revive an economy battered by the 2011 uprising that ended Hosni Mubarak’s three decades of autocratic rule.