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- The crash comes after Cairo Accedes to Key IMF Exchange Rate Condition
- Egyptian currency exchanges at 23.09 per dollar
- Egypt is set to get $5 billion from the international partners
The pound’s exchange rate against the US dollar fell to a new low of 23.09:1 after Egyptian authorities announced the implementation of a more flexible exchange rate regime.
Before ultimately approving a $3 billion bailout package for Egypt, the International Monetary Fund (IMF) required that Cairo’s apparent devaluation of the Egyptian pound satisfy a crucial condition.
A report, the central bank’s announcement of a more flexible exchange rate regime caused the official Egyptian pound to fall by 15 percent to 23.09 per dollar.
IMF’s Key Condition
The news that Egypt had reached an agreement with the International Monetary Fund (IMF) to receive a $3 billion financial bailout coincided with the apparent devaluation of the currency in Cairo.
The pound had been trading at just under 20 dollars per unit prior to its most recent decline. The IMF and some Egyptian banks argued that the currency was overvalued when the exchange rate was last changed in March.
The exchange rate between the pound and the dollar had been the same for roughly two years prior to that. As Bitcoin.com News previously reported, Egypt’s ability to obtain a bailout from the international financial institution was contingent on the country’s abandoning the fixed exchange rate regime.
The IMF had previously demanded the devaluation of the Egyptian pound, as noted in the report, prior to approving a $12 billion loan package in 2016.
Egypt will receive $5 billion from the so-called international partners in addition to agreeing to the $3 billion loan package. Support from Egypt’s allies in the Gulf Cooperation Council.
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Support From Egypt’s Allies
The additional funding, according to a Bloomberg report that cites unidentified government officials, is intended to assist Egypt in covering its external financing gaps. Additionally, Egypt has requested $1 billion from the IMF’s brand-new sustainability fund.
Gordon Bowers, an analyst with London-based Columbia Threadneedle Investments, stated that despite the fact that Egypt’s most recent loan agreement with the IMF has not lived up to expectations, this most likely paves the way for the country’s wealthy allies to step in.
He stated that it appeared that IMF involvement was necessary for additional GCC support. This is encouraging. Egypt’s GCC allies are said to have pledged over $20 billion in aid, which is likely to come in the form of deposits and investments, according to reports.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
