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Egypt seeks new currency indicator to end dollar peg

October 24, 2022 at 1:53 pm

People walk past the Egyptian Central Bank in downtown Cairo on 3 November 2016 [KHALED DESOUKI/AFP via Getty Images]

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, Anadolu News Agency reports.

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

He added that the CBE “is aiming to change this concept”.

Abdalla said the CBE has finalised the forward contracts for the Egyptian pound.

“The CBE is working on the hedge contracts for the local currencies as a tool to navigate the impacts of the Russian-Ukrainian conflict which affected the hard currency in the Egyptian market,” he added.

The Egyptian economy has been hard-hit by the consequences of the Ukraine war, which erupted in February.

The Egyptian pound plunged to a record low against the dollar in October, trading at 19.72 for selling and 19.62 for buying, according to the official exchange rate on Sunday.

Egypt is seeking a loan agreement with the International Monetary Fund (IMF) to shore up its economy.

READ: Egypt seeking to push forward critical IMF deal in Washington