Central Banks
Egypt’s Devaluation and Record Rate Hike Put IMF Deal in Reach
- Proceeds from UAE investment crucial for enabling devaluation
- Dire shortages of hard currency stoked inflation, hurt economy
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Egypt delivered its biggest-ever interest-rate hike and allowed its currency to weaken more than 38% in a long-awaited devaluation that may pave the way for billions more in loans from the International Monetary Fund.
The series of moves included a 600 basis-point rate increase and came after Cairo struck a $35 billion deal late last month with the United Arab Emirates. A dire shortage of foreign exchange has until now hammered businesses and caused the cost of imported goods to soar. The Israel-Hamas war has added to economic pressures.