Forex

Stocksak: Egypt to create a new currency indicator to get people off the U.S. Dollar


© Stocksak. FILE PHOTO. Hassan Abdalla, Governor of the Central Bank of Egypt, arrives at the IMF headquarters during Annual Meetings of World Bank and International Monetary Fund in Washington, U.S.A, October 15, 2022. REUTERS/James Lawler Duggan

CAIRO (Stocksak), – The new governor of the central bank said that Egypt will create a new currency indicator partly in order to dispel the notion that the Egyptian pound should be tied to the U.S. dollars.

Hassan Abdalla, who was appointed in August, stated at an economic conference that the central banking was also working on currency hedging. It had already completed futures contracts, as it is reorganizing its currency trading system.

He said that the indicator would be based upon a basket of currencies and possibly gold.

He said, “It is for my own sake — and I’m talking about the idea of pegging, not the price. I’m talking about the idea.” “America is not a major trading partner of mine. I don’t know why people are always so obsessed with the dollar.

“Part of our success is in changing the culture and ideas that we are tied to. We want to be seen in every currency.

The Egyptian pound had been fixed at around 15.70 pounds to the dollar for 18 years before the Ukraine crisis. This caused a flight of billions out of Egyptian Treasurys in a matter a few weeks. The central bank devalued the currency in March and has allowed it to gradually weaken ever since.

Since March, Egypt has been negotiating a financial aid package with the International Monetary Fund. The Fund has long urged Egypt to adopt a more flexible rate of exchange.

Since the Ukraine crisis, Egypt’s pound has been stronger against the euro, British pound and Turkish lira. Abdalla said that people don’t see all of this.

Abdalla stated that despite the currency reform, the central bank’s primary goal would be to bring down inflation, which is currently at 14%.

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