The Clap
CBE governor Hassan Abdullah revealed initiatives designed to better track the EGP’s value.
EGP index
The index aims to serve as another way to track the EGP’s value by tracking it against a basket of currencies and gold.
Abdullah argued that tying it with the U.S. Dollar isn’t the most accurate measure, especially since the U.S. isn’t Egypt’s main trade partner.
He noted that no one noticed the EGP increasing against the British Pound or the Turkish Lira due to its strong tie to the USD.
Hedging instruments
Abdullah also hinted at instruments that would allow investors to hedge against (limit their losses) the EGP in the case of devaluation.
You should know
The CBE is planning on introducing financial derivatives in the near future, but the implementation won’t begin until the foreign currency situation improves.
In related news
Abdullah also stated that new inflation target rates are set to be declared by the end of the year, with the current target rate being 5-9%.
