Egypt’s gov’t adopts more flexible exchange rate after devaluation

Egypt’s Central Bank has devalued the pound and said it would move to a more flexible exchange rate policy to ease foreign exchange shortage.

The Egyptian currency will now trade at 8.85 to the dollar, down from a previous 7.73.

The central bank also pumped nearly $200 million into the dollar-starved banking system in a surprise sale.

With tens of millions living in poverty, the Central Bank had been reluctant to devalue for fear of sparking inflation.

Economists said the move would encourage foreign investment in Egyptian stocks and treasuries, which have seen an exodus of foreign money in recent years.