Capital flight and repeated devaluations of the pound

Egypt's heavy reliance on foreign portfolio inflows into its local debt market, and on dollar earnings from tourism, Suez Canal fees and remittances, left it exposed when Russia's invasion of Ukraine in February 2022 triggered a rush out of emerging-market assets; an estimated 20 billion dollars in foreign holdings of Egyptian treasury bills reportedly left the country within weeks. The Central Bank of Egypt devalued the pound by about 5% in March 2022, but pressure kept building, and on 27 October 2022 the CBE announced it would move to a flexible, market-determined exchange rate and raised key rates by 200 basis points, a step the bank's own press release tied directly to a new three-year, 3 billion dollar IMF Extended Fund Facility agreed that December. A third devaluation followed in January 2023, pushing the pound to roughly 31 per dollar, and by 2024 the pound had lost more than 70% of its 2022 value. The repeated devaluations reflected the CBE's recurring difficulty making a genuine break from administered exchange rates even while formally committing to flexibility each time.