Central Bank of Egypt (CBE) Governor Hisham Ramez appointed deputy governor Gamal Negm to serve as caretaker governor until the end of his term, an official CBE spokesperson told Ahram Online on Wednesday.
"Governor Hisham Ramez has handed over his responsibilities to Gamal Negm and is on leave as of today, until the end of his term on 26 November," the spokesperson told Ahram Online in a phone interview on Wednesday.
The news comes as the CBE strengthened the Egyptian Pound against the U.S. Dollar by LE0.20 to an official rate of LE7.73 on Wednesday, to inject dollars into the banks, according to Reuters.
Bankers said that the CBE is offering dollars to banks at the stronger rate to help them cover a quarter of the dollar overdrafts they have opened up for clients suffering from strict currency controls that have led to a dollar shortage, Reuters reported on Wednesday.
In return, the CBE is expected to ask the banks to deposit dollars to boost its foreign currency reserves, currently standing at $16.4 billion, enough to cover three months worth of the country’s imports of food and fuel, the bankers told Reuters.
“It could be a temporary arrangement whereby the CBE is subsidising this injection at a lower exchange rate to help importers compensate for losses and ease the FX shortage that has been derailing the sector for some time,” Hany Farahat, Economist at Cairo-based CI Capital told Ahram Online, “or…it could turn out to be the new going exchange rate which at this juncture would not be sustainable.”
The cut-off price at the CBE’s foreign currency auction on Thursday will clarify if the appreciation is temporary or not, said Farahat, adding that a longer-term appreciation “would not be sustainable thing to do at this juncture because it’s not sustainable given structural pressures on the Egyptian Pound.”
The Central Bank, which has been controlling the exchange rate through regular foreign currency auctions, has allowed the pound to fall by close to 11 percent in a series of controlled devaluations since January, before Wednesday’s surprise move.
But economists and analysts have maintained that the pound remains overvalued.
State-run agency MENA reported that the dollar traded LE1 lower in the black market following Wednesday’s decision, changing hands for LE7.70 amid heavy selling.
Former National Bank of Egypt Chaiman and Deputy CBE Governor Tarek Amer is set to take over as Central Bank Governor after the end of Ramez’s term later this month.