CAIRO — The Egyptian Ministry of Finance earlier this month announced the scrapping of the customs dollar exchange rate it had set in 2017. Going forward, the rate will be floated.

The Sept. 1 statement noted that the customs exchange rate had only been temporarily fixed to stabilize commodity prices on the domestic market following flotation of the Egyptian pound as part of IMF-mandated reforms in 2016, and due to the volatility of the dollar.

In January 2017, the Ministry of Finance decided to fix the customs exchange rate of the dollar at the beginning of each month. This came after importers' calls to hold down prices, which were increasing due to the pound's flotation. At the beginning of October 2017, the price of the customs dollar was fixed at 16 Egyptian pounds and remained there for more than a year. In December 2018, the ministry decided to float the rate for non-essential and recreational goods and only kept it fixed, at 16 pounds, for commodities.

Yemen al-Hamaki, a professor of economics at Ain Shams University, told Al-Monitor, “The decision to float the Egyptian pound in late 2016 led to a 33% increase in the price of goods. To contain prices in the Egyptian market, especially commodity prices, the Egyptian government fixed the customs exchange price of the dollar.”