Egypt Adopts More Flexible Exchange Rate After Devaluation - Bloomberg Business:
"The Egyptian central bank surprisingly devalued the pound by almost 13 percent and said it will adopt a “more flexible exchange rate” policy, steps that seek to ease a foreign-currency shortage hampering growth in the most populous Arab country. Stocks rallied.
The decisions will achieve “exchange-rate levels that reflect the strength and real value of the local currency in a short period of time,” the central bank, led by Governor Tarek Amer, said in a statement on Monday. The regulator earlier sold $198.1 million to local lenders at 8.85 pounds per dollar. That compares with a previous exchange rate of 7.73 pounds.
Shortly after the central bank’s statement, Egypt’s biggest lender that it will launch a financial product allowing foreign investors in local government debt to hedge their exposure to the currency. The moves may help boost foreign reserves, which have tumbled more than 50 percent since the 2011 uprising the ousted President Hosni Mubarak, before stabilizing at just over $16 billion in the past six months. Policy makers aim to increase reserves to $25 billion by the end of 2016, the central bank said."
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