The Central Bank of Egypt let the pound float freely on Wednesday, causing the currency to plummet in value, while also announcing an expanded deal with the International Monetary Fund (IMF).
At the same time, the bank hiked interest rates by a whopping 6%, citing “global inflationary pressures” as well as “foreign currency shortages” in the Egyptian economy. The bank's key policy rates are now between 27.25% and 28.25%, its Monetary Policy Committee said in a statement.
Higher interest rates tend to attract foreign investment and bring down inflation by encouraging saving.
Relatedly, the Central Bank decided to let the Egyptian pound be determined by market forces, the state-owned news outlet Al-Ahram reported.
