New Egyptian central bank chief faces currency crisis

Significance

The previous governor, Tarek Amer, departed on August 17 after seven years in post. Though credited with the flotation of the Egyptian pound in 2016, he often attracted criticism. Egypt's external debt burden trebled during his tenure and it faces a severe balance of payments crisis.

Impacts

• If Cairo remains committed to securing a new IMF deal, exchange rate policy will become more genuinely flexible than under Amer.
• Flexibility would lead to devaluation in the short term, but would help to rebuild foreign exchange reserves by constraining imports.
• The central bank may adopt a looser monetary policy, as aggressive interest rate hikes have increased the debt-servicing burden.