Floating the pound and the IMF program

Egypt's pound had been held by the Central Bank of Egypt at an artificially strong official rate for years after the 2011 uprising, even as tourism revenue and remittances weakened, producing a persistent dollar shortage and a parallel market where the pound traded far below its official value. On 11 August 2016 Egypt and the IMF reached staff-level agreement on a three-year, 12 billion dollar Extended Fund Facility, conditioned on exchange-rate reform, and on 3 November 2016 the CBE devalued the pound by roughly 32.5% and announced it would let the exchange rate float, moving from an official rate near 8.8 pounds per dollar to around 13, with the rate drifting toward 18-19 within weeks as the market cleared. The CBE simultaneously raised its key policy rates by 300 basis points to contain the inflationary impact. The move eliminated the parallel market almost overnight by bringing foreign-currency trading back into the formal banking system, and the IMF loan, signed 11 November 2016, was explicitly premised on the float as the step needed to restore competitiveness and rebuild reserves.