The gap between the official and black market price of dollars in Egypt has narrowed significantly since the central bank announced a flexible exchange rate policy.
On Thursday, Cairo announced a $3 billion International Monetary Fund deal with a commitment to a “durably flexible exchange rate regime.”
The central bank also raised interest rates by 200 basis points in an out-of-cycle meeting, saying it aimed to anchor inflation expectations and contain demand-side pressures.
The Egyptian pound was trading at 24.15 to the dollar on Tuesday, according to Refinitiv data.
Since Thursday, the gap between the black market and official rates for most transactions has shrunk to just five or ten Egyptian piasters, one of the traders said.
The central bank also said on Thursday it was introducing a series of new instruments, including currency swaps and forwards, to allow banks greater flexibility in currency trading.
It added that it would end a rule prohibiting non-deliverable forwards (NDFs) and would allow banks to conduct them for the same non-speculative purposes.
