Can floating Egyptian pound kill foreign currency black market?
Egypt's latest flotation of its currency may rein in its thriving foreign currency black market, but economists cannot see an end to this market in the near future.
CAIRO — Speculation is rife over the future of a burgeoning parallel foreign currency market, after the Central Bank of Egypt (CBE) ended a managed exchange rate regime, allowing the Egyptian pound to trade freely against foreign currencies, for the second time in six years.
Apart from liberalizing the pound Oct. 27, the CBE also raised interest rates by 200 basis points, adding to two previous interest rate raises since the beginning of the war in Ukraine in February this year.
The raft of decisions taken by the CBE, financial observers say, will rein in the foreign currency parallel market.
"They will partially achieve this, especially with the rate inside the banks coming close to the one outside them," Khaled al-Shafie, head of local think tank Capital Center for Economic Studies, told Al-Monitor. People will continue to resort to the black market.
