Egypt’s central bank said Thursday it had floated the country’s pound as part of a raft of reforms aimed at shoring up confidence in the economy.
The bank said in a statement it had moved to a “liberalized exchange rate… to create an environment for a reliable and sustainable supply of foreign currency”.
Egypt has been struggling to boost its foreign currency reserves in the political and economic turmoil following the toppling of former ruler Hosni Mubarak in 2011.
Bankers told Reuters they had been informed that the central bank would set an initial guidance rate of 13 pounds to the dollar at a sale at 1300 local time (1100 GMT) and allow free bids and offers while the market converges on a real price.
The bank also hiked interest rates by 300 basis points in a move to rebalance currency markets.
Furthermore the statement said the central bank would abolish the priority list for imports and phase out monetary financing of the budget deficit over the coming months.
The government of President Abdel Fattah al-Sisi is rolling out an austerity program and is seeking billions in support from abroad in order to meet conditions for a $12 billion loan from the International Monetary Fund and boost investor confidence.
The country’s foreign currency reserves stood at $19.6 billion in September, an increase from previous years but less than 50 percent of the level in early 2011.