Egypt’s c. bank’s recent decisions eliminate FX parallel market

The Central Bank of Egypt’s (CBE) recent decision will boost confidence in the Egyptian economy and eliminate currency exchange rates on the black market, the Federation of Egyptian Banks (FEB) reported on Wednesday, citing CEO of QNB Alahli Bank, Mohamed Bedir.

Bedir emphasised that the timing of the decision was crucial and would have a positive impact on exchange rate stability. The CBE also stressed the importance of aligning fiscal and monetary policies to protect the local economy from external shocks, he added.

The Monetary Policy Committee held an extraordinary meeting on early Wednesday morning and decided to increase deposit and lending rates by 600 basis points to 27.25 per cent and 28.25 per cent, respectively.

These decisions are part of a comprehensive economic reform package in coordination with the Egyptian government and international partners to support the economy and ensure foreign exchange liquidity, the statement added.

The move to eliminate the parallel foreign exchange market is expected to reduce inflation expectations and control inflation in the medium term. However, risks such as geopolitical tensions and global market fluctuations could impact inflation.