The Central Bank of Egypt ended a managed exchange rate regime for the second time in six years. This allowed the Egyptian pound to trade freely against foreign currencies. Now, sources are speculating over the future of an upcoming parallel foreign currency market. The CBE also raised interest rates by 200 basis points, adding to two previous interest rate raises since the beginning of the war in Ukraine in February.
Some financial observers claim that these steps will rein in the foreign currency parallel market. "They will partially achieve this, especially with the rate inside the banks coming close to the one outside them," said Khaled al-Shafie, head of local think tank Capital Center for Economic Studies. People will continue to resort to the black market.
The foreign currency black market thrived across Egypt over the past months, with local banks failing to secure the US dollars needed for import operations.
Source: al-monitor.com