Central Bank of Egypt (CBE) Deputy Governor Gamal Negm reported that Egypt’s foreign currency gap had narrowed sharply to US$400m in July from US$3.9bn in February. Negm noted that the foreign currency gap, the difference between the country’s foreign currency needs and its current holdings, had narrowed last month due to the CBE’s decisions regarding “import regulationโ. Negm also ruled out any considerable devaluation of the local currency soon. In recent weeks, a greater flexibility in the Egyptian pound has emerged as an issue for Egyptian authorities who are seeking to secure a new loan from the International Monetary Fund. The pound remains overvalued on a real effective exchange rate basis, and the IMF recently said that “greater exchange rate variability during the SBA could have been entrenched to avoid a buildup of external imbalances and facilitate adjustment to shocks.โ
