Egypt is not in the midst of discussions with IMF to peg LE to new basket of currencies, Bloomberg

In response to recent news reports, an official with direct knowledge of the matter spoke with Bloomberg to refute news regarding Egypt’s plans to peg the EGP to a basket of international currencies and gold.

Quoted by local media outlets on Tuesday, the head of the House Planning and Budget Committee, Fakhry El Fiqi, stated that Egypt was close to reaching an agreement with the International Monetary Fund (IMF) to peg the Egyptian pound to a new group of hard currencies including EUR, JPY, and GBP by early 2024.

The Egyptian pound is currently pegged to the USD.

At last year’s Egypt Economic Conference, then-acting CBE governor Hassan Abdallah announced that the central bank was developing an index for the LE that would potentially link it to a basket of foreign currencies and gold.

During his speech, Abdallah explained that unpegging the Egyptian pound from the US Dollar would help Egyptians accept the idea of a free-floating currency, adding that “Part of our success will be in changing the culture and idea that we are pegged. We want to be seen against every currency”.

Pegging a country’s currency to another is common for those participating in international trade as a method to safeguard the competitiveness of their exported goods and services. The practice is seen to promote trade as it reduces foreign exchange rate risk and other risks, such as political risk, with a significant number of currencies pegged to the USD.