Egypt: pound fall a sign that officials are on right path

The sharp fall in the Egyptian pound today, coming in the wake of last week’s move to ease FX restrictions, suggests that the authorities are starting to make good on their pledge to shift to a more flexible exchange rate regime. There are already signs that improved competitiveness is supporting exporters. But in the very near term, high and rising inflation as well as tight fiscal and monetary policy caused by the pound’s fall will weigh on economic growth.