Egypt floats the pound and raises rates 600 points after IMF deal

On 6 March 2024, Egypt's central bank announced that it would move to a flexible exchange rate, ending a tightly managed peg that had held the pound near 30.9 to the US dollar. On the same day it raised its key interest rates by 600 basis points (six percentage points), taking the overnight deposit rate to 27.25%.

The move came alongside an agreement with the International Monetary Fund to expand Egypt's support program from about $3 billion to roughly $8 billion. It followed a large investment deal with the United Arab Emirates for the Ras El-Hekma coastal development, announced in late February, which brought in a substantial inflow of foreign currency.

The decision aimed to close the gap between the official rate and the parallel (black) market, where the dollar had traded far higher, and to ease the foreign currency shortage that had held up imports. The pound fell sharply, to around 49–50 per dollar at its weakest, before recovering to the high 40s.

For households, the devaluation raised the cost of imported goods, fuel inputs and food, and added to a cost-of-living squeeze already underway, a key background to today's debate over weak purchasing power.