Egypt floats pound, currency falls by 30% against the dollar

The decision this morning by the Central Bank of Egypt (CBE) to finally adopt a floating exchange rate regime is a positive step and moves the government closer to securing a US$12bn financing package from the IMF. There will inevitably be fresh pain for the economy in the near term – inflation is likely to rise further and the CBE hiked interest rates by 300bp today. But, over time, a weaker pound and IMF-backed reforms should lay the foundations for stronger economic growth.