Egypt’s central bank unexpectedly floats the pound

According to media reports, the Central Bank of Egypt unexpectedly announced that it has floated the Egyptian Pound against all foreign currencies, devaluing the current exchange rate by 47.7% as part of the government’s efforts to overcome a hard-currency shortage and to recover from bad economic conditions.

Accordingly, the local currency is allowed to float freely at a rate of 13.00 per US dollar, plus or minus 10%, until the bank holds an auction at 1 p.m. local time. The bank also increased its key lending rates by 300 basis points, that is 3%.

Following the bank’s surprise move, the Egyptian pound reportedly dropped to records in the black market and depreciated to around 17.98 per dollar, narrowing the gap between the official and black market rates, according to Bloomberg.