Egypt's Exchange Rate Regime Policy after the Float

Ali Attia Massoud, Thomas D. Willett
2014 International Journal of Social Science Studies  
The major purpose of this paper is to analyze the actual exchange rate policies followed by Egypt since the Central Bank of Egypt (CBE) announced its adoption of a floating ER regime in January 2003. Based on our analytical and empirical approaches to analyzing the actual degree of flexibility of exchange rate policies we concluded the following. First, the de jure "Free Floating" ER Regime that the CBE announced in January, 2003 was not preserved during the period of the study. Second, the
more » ... dy. Second, the changes in the IMF's de facto classifications of Egypt's actual exchange rate policies were broadly accurate. Third, the move from light to heavy exchange market management in 2011 leads to what has been called a one way speculative option. Fourth, too much attention has been paid to the US dollar in setting exchange rate policies. Since the dollar exchange rate sometimes moves substantially against some of these other currencies such as the Euro, it is important that such fluctuations should also be taken into account. A crawling peg regime, which Egypt announced in January 2001, is easy to classify as a type of regime, but important questions remain about how flexibly it was operated. In most standard classifications, crawling pegs are put more toward the fixed end of the exchange rate spectrum than a managed float. Research has shown however, that some managed floats have operated with less flexibility than some crawling pegs and vice versa (see Willett et al., 2005) .For an illustration of this for the exchange rates of several Asian countries before the Asian crisis of 1997-1998. Thus, with both crawling pegs and managed floats it is important to analyze how they actually operated and how this
doi:10.11114/ijsss.v2i4.445 fatcat:gjvkitbpobed7oo7gylc5cx7qe