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Egypt’s pound hit a record low on Wednesday after the central bank said it would let the currency trade freely and hiked rates by 600 basis points at an unscheduled meeting.

The currency weakened to beyond 50 pounds to the dollar from about 30.85 pounds, a level Egypt has for months tried to defend.

A more flexible exchange rate is a key demand of the International Monetary Fund, which officials have signaled is close to confirming an expansion of its current, 3 billion U.S. dollar support programme with Egypt.

Analysts welcomed Wednesday’s steps, saying they paved the way for the deal with the fund.

Egypt has in the past said it would shift to a more flexible exchange rate, only to return to closely managing the currency whenever the pound weakened.

Egypt has been suffering from a chronic shortage of foreign currency. The central bank said its actions were “backed by the steadfast support of multilateral and bilateral partners” and that “sufficient funding has been secured to avail foreign exchange liquidity”.

After the announcement, Egypt’s international bonds soared, with longer-dated bonds gaining around 4 cents before giving away some gains. By 1200 GMT, the 2049 bond was up 2.3 cents at 83.25 cents, according to Tradeweb data.

The premium demanded by investors to hold Egypt’s international bonds over safe-haven U.S. Treasuries tightened to as little as 529 basis points, its lowest level since June 2021, according to JPMorgan.

The central bank said it had raised the overnight lending rate to 28.25 percent and its overnight deposit rate to 27.25 percent, as part of a decision to accelerate monetary tightening and bring down inflation, which rose to record levels last year.

“To ensure a smooth transition, the Central Bank of Egypt will continue to target inflation as its nominal anchor, allowing the exchange rate to be determined by market forces,” it said in a statement.