Egypt has allowed its currency to weaken sharply, pushing the pound to levels not seen in years against the dollar. Reuters notes that this move forms part of discussions with the International Monetary Fund to broaden Cairo’s loan program and secure greater financial support.
When trading began, the Egyptian pound dropped from around 30.85 per dollar to a range exceeding 50 units per US dollar. Officials had long defended a narrower band, but the new approach aims to provide more exchange rate flexibility. This shift aligns with the IMF’s insistence on greater currency mobility as a prerequisite for a broader agreement on a possible $3 billion loan package that could also be expanded in the future, Reuters adds.
The Central Bank of Egypt asserted that its actions were supported by continued backing from multilateral and bilateral partners, and that ample financing had been arranged to ensure adequate foreign exchange liquidity, according to the agency’s briefing. Reuters reports that the devaluation or flexible exchange stance has been accompanied by market signals suggesting a tighter alignment with global financial conditions and a move toward a more market-driven regime.
Following the devaluation announcement, Egyptian eurobonds reportedly rose in value while the spread between US Treasuries and related securities narrowed to levels not seen since mid-2021, reflecting a perceived improvement in relative risk and investor appetite. Analysts cited by Reuters point to the devaluation as clearing the path for renewed IMF negotiations, with an unnamed senior official indicating to Al Qahera News that a formal agreement could come through within hours, signaling a potential immediate policy pivot and financial program expansion.
In regional markets, attention remained fixed on neighboring Turkey, where the lira had also touched a historic low in the prior trading sessions, underscoring persistent currency pressures across the region and the complex interplay between domestic policy choices and global capital flows. The broader market reaction showed how currency adjustments can influence sovereign borrowing costs and investor confidence, with implications for regional economic stability and credit spreads across fixed income instruments.
Meanwhile, the digital asset space reflected a broader risk appetite shift. Bitcoin reached a milestone, surpassing the $69,000 mark for the first time in recent memory, illustrating how crypto markets often respond to macroeconomic developments and currency movements. The movement in digital assets was noted by multiple market observers as part of a wider search for hedges and alternative stores of value amid fluctuating fiat conditions.