In response to the sufficiency of the special meeting held on Wednesday, March 6, the Central Bank of Egypt (CBE) has opted to cancel the previously scheduled meeting of the Monetary Policy Committee (MPC) slated for Thursday, March 28.

 

During the special meeting on March 6, the CBE enacted significant adjustments, raising the overnight deposit rate, the overnight lending rate, and the main operation rate by 600 basis points each, resulting in rates of 27.25%, 28.25%, and 27.75%, respectively. Furthermore, the discount rate was increased by 600 basis points to 27.75%.

 

Additionally, the decision was made to transition to a freely floating exchange rate regime, with the CBE reaffirming its commitment to targeting inflation as the nominal anchor, allowing market forces to dictate the exchange rate.

 

Explaining the rationale behind this move, the CBE emphasized the importance of exchange rate unification in streamlining the elimination of foreign exchange backlogs arising from the convergence of official and parallel exchange rate markets.

 

This adjustment in monetary policy coincides with Egypt's recent landmark agreement, securing a substantial $35 billion investment from the Abu Dhabi Developmental Holding Company, marking the largest foreign direct investment in the nation's history.

 

Given Egypt's persistent foreign currency shortage over the past two years, this investment assumes critical significance.