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What Not to Do When Floating a Currency: Lessons for Egypt

  • Nigerian black market thrives due to central bank interference
  • Hands-off Russia, Argentina policy helped smooth transition
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Egypt Stocks Soar as Bonds Rally on Currency Float

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If Egypt can learn anything from emerging markets that have abandoned control of their currencies, it’s that a half-hearted approach is bound to fail.

The North African country on Thursday became the latest developing nation to announce a free float in the past two years, unleashing a 45 percent slide in the pound to 16 per dollar, according to quotes from six banks including Commercial International Bank Egypt SAE. Whether the move eases the dollar crunch and quashes the black market will depend on how committed the central bank is to staying hands-off when currency swings ensue.