Defending the Central Bank of Egypt’s decision to devaluate the Egyptian Pound against the US Dollar and the Monetary Policy Committee’s (MPC) raising of interest rates yesterday, CBE governor Tarek Amer said the pound had undergone a “correction” that would make exports competitive and reflected world and local developments.

“The Central Bank’s decisions regarding, interest and exchange rates are very good and strong. The decisions aim at preserving Egypt’s financial capabilities and maintaining the liquidity of the foreign exchange,” said Amer in a press conference on Monday.

The Egyptian pound fell by 16.67% yesterday after news of the MPC’s unscheduled meeting, plunging to its lowest value in almost five years against the US dollar, starting the day at EGP 15.6 for buying and EGP 15.7 for selling to closing at EGP 18.1 for buying and EGP 18.2 by end of bank working hours.

The sudden drop reminded many Egyptians of the November 2016 devaluation, which saw the pound lose nearly half of its value.

Amer noted that the importance of interest rates boils down to providing liquidity; without liquidity, the prices would be very different, pointing out that the Egyptian banks have sufficient liquidity and finance development projects.

International reactions to CBE decisions regarding the exchange and interest rates are positive, he said, adding “due to our strong financial reserves, we were able to repay all our international obligations on time.”

The Russian-Ukrainian war was another blow that led to global economic instability and major economic wars, and of course, it affected Egypt, Amer continued.

“We became part of the international market, so it was necessary to take measures regarding the monetary policy to maintain confidence in foreign investment in Egypt and confidence in the international market,” the governor said.

“We controlled the inflation rates over the past 7 years as they recorded 3.5 and 4%. Also, interest rates have not been raised since 2017, besides we provided subsidized interest rates for the industry, tourism and contracting sectors,” he added.

Some Egyptian banks have begun to offer deposit certificates with an 18% annual yield.