It is the largest single-day decline of the Egyptian pound's value since the CBE allowed it to drop by about 14.5 percent in late October 2022. The country devalued its currency twice in 2022.
The move complies with the country's "shift to a durable exchange rate regime" to contain inflation as a key demand of the International Monetary Fund (IMF), which has recently approved a loan of 3 billion dollars to Egypt to support its economic and structural reforms.
The IMF's support package also includes measures to be implemented by Egypt to "reduce the state's footprint" and "facilitate private-sector-led growth."
Earlier on Wednesday, Egypt's two main national banks, Banque Misr and the National Bank of Egypt, offered certificates for one-year savings with a record-high 25-percent interest rate, a move that usually signals a devaluation of the local currency.
Over the past year, Egypt has been facing increasing inflation, which was driven by the global hike of food and energy prices. The country's annual urban consumer inflation rate surged to 18.7 percent in November 2022, marking the highest in nearly five years.
In December 2022, the CBE announced raising the interest rate by 300 basis points to contain soaring inflation, increasing the deposit rate to 16.25 percent and the lending rate to 17.25 percent.
Raising interest rates aimed "to contain inflationary pressures and to steer annual headline inflation rates towards its upcoming targeted levels," Egypt's central bank explained then.
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