Political sketch
Also known as the United Arab Republic (1958-1971) and part of the United Arab States (1958-1971). Independent from the United Kingdom on 28 February 1922.
Egypt has one of the world's oldest civilizations. In modern times, it was initially part of the Ottoman Empire, but ruled by a group known as the Mamluks. In July 1798 a French force led by Napoleon invaded Egypt, hoping to harass the United Kingdom by hindering trade with India occurring through Egypt. French occupation lasted until 1801, when British, British Indian, and Ottoman troops defeated the French. After a period of struggle following British withdrawal, Muhammad Ali, who was neither Mamluk nor Ottoman, emerged as a strong ruler, only nominally under Ottoman control. He engaged in a number of wars with neighboring states to spread Egyptian power. His successors tried to fend off European domination while using European knowhow to modernize the economy and borrowing from European financial markets. The French- and British-financed Suez Canal, on which work had begun in 1859, was opened in November 1869. In 1876, with the government unable to pay its debt to the private sector, government finances were placed under British and French control. (The British and French were interested in Egypt for its role as a possible choke point of communication with their Asian colonies.) In 1882 the United Kingdom sent troops to support the khedive (ruler) against groups who wanted an Egypt free of European and Ottoman domination alike. France ceded its last strong claims to influence by the Entente Cordiale, an agreement of 1904. Shortly after the First World War broke out, the United Kingdom on 19 December 1914 declared Egypt a protectorate. Egypt was a base for British military campaigns against the Ottomans in Palestine.
Pressure from Egyptian nationalists led the United Kingdom to grant independence to Egypt on 28 February 1922, while reserving certain security matters for itself. Egypt became on paper a constitutional monarchy. Politics was a three-way contest between the king, the British, and prime ministers representing the largest political party. During the Second World War, Egypt was again a base for British operations, this time against the Germans. After the war, nationalists wanted an end to the British presence. Military officers led by Gamel Abdel Nasser overthrew the monarchy on 23 July 1952. Nasser expropriated the Suez Canal in from its British and French owners in 1956, as the first step in what turned out to be an ambitious attempt to establish socialism. The expropriation provoked a joint British-French-Israeli invasion. Pressure by the United States forced the invaders to give up control of the canal. Egypt was also involved during this period with wars against Israel in 1948-1949, 1967, and 1973. Nasser unsucessfully attempted union with Syria (the United Arabe Republic, 1958-1961) and North Yemen (the United Arab States, also 1958-1961). After the 1967 war, Anwar Sadat, who had been among the military officers who had joined Nasser in the 1952 coup, exercised more and more control. Sadat became vice president in 1969 and president in 1970 upon Nasser's death. He was assassinated on 6 October 1981 by a group disgruntled with his peacemaking with Israel. Sadat's successor, Hosni Mubarak, remains in power today (2005). Egypt has never been a democracy. Since Nasser it has gradually moved away from socialist economic policies, but its economy still has little dynamism. The government suppressed guerilla activity by the Muslim Brotherhood in the 1990s. Cotton, the main export in the 1800s and much of the 1900s, has long since been replaced in importance by manufactured goods.
Wars since 1500
Mamluk-Ottoman War of 1516-1517; French Occupation of 1798-1801 (against Ottoman Empire and United Kingdom); British Invasion of 1807; Egyptian War with the Wahabbis, 1811-1818 (in present-day Saudi Arabia); Egyptian Invasion of Sudan, 1820; Secession of Bashir II, 1832 (Egypt supported Bashir II in Syria against the Ottoman Empire); First Turko-Egyptian War, 1832-1833; Second Turko-Egyptian War, 1839-1841; Abyssinian (Ethiopian)-Egyptian War of 1875-1877; Sudanese War of 1881-1885 (with United Kingdom against Sudanese); British Invasion of 1882; Sudanese War of 1896-1899 (with United Kingdom against Sudanese); First World War in the Middle East (Ottoman Empire against United Kingdom, France, and allies), 1914-1918; Sanusi Revolt of 1915-1917 (Libyan Sanusiyah Brotherhood against United Kingdom, made incursions into Egypt); Second World War in North Africa, 1940-1942 (United Kingdom, United States, and Free French forces against Germany, Italy, and Vichy French forces); Arab-Israeli War of 1948-1949 (with Syria, Jordan, Lebanon, and Iraq against Israel); Arab-Israeli War of 1956 (Suez or Sinai War) (against Israel, United Kingdom, and France); Yemenite Civil War of 1962-1970; Six-Day War, 5-10 June 1967 (with Syria and Jordan against Israel); Arab-Israeli War of 1973 (Yom Kippur War, October War, or War of the Ramadan) (with Syria and joined by Iraqi, Jordanian, and Libyan troops against Israel), 1973; Libyan-Egyptian War of 1977.
Convertibility
Egypt imposed exchange controls on 2 August 1914, following the outbreak of the First World War, because sufficient gold to supply local demand was not available for import from London and elsewhere (Egypt, decree of 2 August 1914, translated in National Bank of Egypt 1948: 37). From this time until it established a gold parity with the International Monetary Fund, the Egyptian pound was on the sterling exchange standard. Exchange controls may have ended in 1925, when the United Kingdom returned to the gold standard, but they were reintroduced on 28 September 1939, after the Second World War broke out. They applied to territories outside the sterling area (National Bank of Egypt 1948: 66; IMF ARER 1950: 125). Egypt left the sterling area on 14 July 1947. It established exchange control with Sudan 11 February 1953; previously there had been no controls, since Sudan, which was under joint British and Egyptian administration, was considered an appendage of Egypt.
Other
Economic slumps: 1866 (end of cotton boom as southern United States no longer suffered from the U.S. Civil War blockade), 1907, 1921, 1929-1933.
Defaults on or restructurings of debt to the private sector (mainly from Purcell and Kaufman 1993 and Standard & Poor's 2004): 1816, 1876-1880 (foreign currency bond debt), 1984.
Reinhart and Tokatlidis (2000: 33) dating of recent financial liberalization: Domestic (notably interest rates) 1991, external (notably foreign-exchange market and participation by foreign financial institutions) 1991.
Banking crises (data since 1970s mainly from Caprio and Klingebiel 1999 and Frydl 1999): 1882, related to British invasion; a bank run 1914; crisis 1981; major problems when government closed several large investment companies in early 1980s; moderate problems 1990-1995, a period when four government banks were given aid. A crisis of government debt 1876.
Bordo and Eichengreen (2001) list currency crises in 1975, 1979, 1989, and 1994 (a twin currency and banking crisis).
Frankel and Rose (1996) list of currency crashes: 1979, 1990.
References
Primary sources:
--Laws and decrees:
Egypt. Gazette. 1828-present. Waqa'i` al-Misryah. French version Moniteur égyptien (1873-1885); Journal officiel du Gouvernement égyptien (1885-1860); Journal officiel de la République arabe unie (1960-1967?). Cairo: Al-jaridat al-rasmiah (Imprimerie Nationale).
Great Britain (United Kingdom). Gazette. 1665-present. Oxford Gazette (1996-1666); London Gazette (1666-present). Oxford (1665-1666); London (1666-present): His/Her Majesty's Stationery Office from 1903. Online at <http://www.gazettes.online.co.uk>; as of September 2005, gazettes since 1900 are available.
--Publications of monetary authorities:
Bank al-Ahl al-Misr (National Bank of Egypt). Annual report. 1899-present. Governor's Speech; Report and Balance Sheet (1899?-1939; the earliest issue I have seen in 1938); Report and Balance Sheet; Address by the President of the Board (1940); Report of the Forty-Second [etc.] Ordinary General Meeting (1941-1958); Report of the Board of Directors (1959); Report and Balance Sheet (1960); Report of the Board of Directors (1961); Report and Balance Sheet (1962-1963/1964); Annual Report (1964/1965-present). Cairo: National Bank of Egypt. (Also printed in an Arabic version, Taqr al-sanaw., and during the early and mid 1900s in a Frenchy version, Rapport de la ... assemblée générale ordinaire.)
Bank al-Ahl al-Misr (National Bank of Egypt). Bulletin. 1939-1941, 1948-present. Report (1939-1941); Economic Bulletin (1948-present). Cairo: National Bank of Egypt. (Also printed in an Arabic version.)
Bank al-Markaz al-Misr (Central Bank of Egypt). Annual report. 1961-present. Report of the Board of Directors for the Year ... (1961-1974); Annual Report (1975-present). Cairo: National Bank of Egypt. (Also printed in an Arabic version.)
Bank al-Markaz al-Misr (Central Bank of Egypt). Bulletin. 1961-present. Economic Review. Cairo: Central Bank of Egypt. (Also printed in an Arabic version.)
--Web site of the current monetary authority (viewed 20 September 2005):
<http://www.cbe.org.eg>
--Other publications or Web sites:
IMF. International Monetary Fund. 1946-1971 (irregular). Schedule of Par Values. Washington: International Monetary Fund.
Main secondary sources:
Autheman, André. 1996/2002. La Banque impériale ottomane. Paris: Ministère de l'économie et des finances, Comité pour l'histoire économique et financière de la France, 1996. English version The Imperial Ottoman Bank, translated by J. A. Underwood. Istanbul: Otoman Bank Archives and Research Centre, 2002.
Barclays Bank (Dominion, Colonial and Overseas). 1938. A Banking Centenary: Barclays Bank (Dominion, Colonial and Overseas), 1836-1936. Plymouth, England: Mayflower Press, for private circulation. (Barclays Bank eventually came to control the National Bank of Egypt.)
Baster, A[lbert] S[tephen] J[ames]. 1929. The Imperial Banks. London: P. S. King and Son. (Concerns banks incorporated mainly in London whose branch networks were elsewhere in the British Empire.)
Farag, Maged M. 1998. Al-Bank al-Ahli al-Misri (National Bank of Egypt) 1898-1998. Agouza, Cairo, Egypt: Max Group, 1998. (I have not seen this.)
Forte, Albert. 1938. Les banques en Égypte…. Paris: Librairie technique et économique.
IMF ARER. 1950-present. International Monetary Fund. Annual Report on Exchange Restrictions (1950-1978), Annual Report on Exchange Arrangements and Exchange Restrictions (1979-1988), Exchange Arrangements and Exchange Restrictions: Annual Report (1989-present). Washington: International Monetary Fund. (Contains information on IMF member countries and some of their dependencies.)
National Bank of Egypt. 1948. National Bank of Egypt, 1898-1948. Cairo: N.B.E. Printing Press.
National Bank of Egypt. 1974. National Bank of Egypt, Seventy-Fifth Anniversary, 1898-1973. Cairo: National Bank of Egypt. (I have not seen this.)
Pamuk, evket. 2000. A Monetary History of the Ottoman Empire. Cambridge: Cambridge University Press. (Some information on Egypt.)
Rifaat, Mohammed Ali. 1935. The Monetary System of Egypt: An Inquiry into Its History and Present Working. London: George Allen and Unwin.
Sultan, Fouad Bey. 1914. La monnaie égytienne. Paris: Arthur Rousseau.
Monetary authorities: Egypt
| Dates | Type | Name | Source | Remarks |
| 7 July 1856
-2 September 1898 |
dollarization | various local and foreign gold and silver coins; paper money was scarcely used | United Kingdom, Bank of Egypt royal charter, 25 January 1856, cited in Baster (1935: 64) | The first durable bank was the Bank of Egypt (headquarters London, England), in Alexandria, on 7 July 1856 (Baster 1935: 65). There was also a short-lived Banque d'Égypte a few years before. The second bank was the Banque Ottomane Impériale (Imperial Ottoman Bank) (headquarters Constantinople [now Istanbul], Turkey), in Alexandria, in October 1867 (Autheman 2002: 63). Egypt had minted its own coins since the 300s BC. |
| 3 September 1898
-10 February 1960 |
central bank (with private ownership and commercial banking functions) | Bank al-Ahl al-Misr or National Bank of Egypt (headquarters Cairo, Egypt) | Egypt, khedival (ruler's) decree of 25 June 1898, translated in National Bank of Egypt (1948: 17) | The National Bank of Egypt was owned mainly by British interests. It issued its first notes on 3 April 1899 (National Bank of Egypt 1948: 22). The Egyptian government officially recognized it as the central bank in May 1951 (Egypt, Law No. 57, May 1951, cited in National Bank of Egypt annual report 1951: no pages, section "The Central Bank"). Official recognition had been proposed in 1940 but was delayed by the events of the Second World War. From 1901-1956 the bank also issued notes in Sudan, which at the time was a joint possession of Egypt and United Kingdom. Egypt joined the IMF on 27 December 1945 as an original member. |
| 11 February 1960
-31 December 1960 |
central bank (with commercial banking functions) | National Bank of Egypt or Bank al-Ahl al-Misr (headquarters Cairo, Egypt) | Egypt, Law No. 40, 11 February 1960, cited in National Bank of Egypt bulletin 1960, no. 1: 1 | The government nationalized the National Bank of Egypt and Bank Misr, Egypt's other large bank. The National Bank of Egypt had already been placed under control of local stockholders by Egypt, Egyptianization Law, No. 22 of 1957 (cited in Central Bank of Egypt bulletin 1984, no. 3: 283). The nationalization of other banks followed. The policy of national ownership of banks persisted until 1974 (Egypt, Law of Arab and Foreign Investment and Free Zones, No. 43, 19 June 1974, cited in ARER 1975: 165). The system did not develop into a full-fledged monobank, though. The ministry of finance continued to be the issuer of coins, as it remains today (2005). |
| 1 January 1961
-present (2005) |
central bank | Central Bank of Egypt or Bank al-Markaz al-Misr (headquarters Cairo, Egypt) | Egypt, Law No. 250, 19 July 1960, translated in Central Bank of Egypt bulletin 1961, no. 1: 94-9; Law No. 277, 12 November 1960, cited in Central Bank of Egypt bulletin 1961, no. 1: 99n; Decree No. 2336, 27 December 1960, translated in Central Bank of Egypt bulletin 1961, no. 1: 100 | The central banking functions of the National Bank of Egypt were spun off as the Central Bank of Egypt. |
Exchange rate arrangements: Egypt
| Dates | Official arrangement | Source | Unofficial arrangement, if different | Remarks |
| 1836
-16 November 1885 |
fixed; Egyptian gold £1 (talari) = 7.4375g gold = 115.28125g silver (gold-to-silver ratio of 1: 15.5) | Egypt, vice-regal ordinance of 9 April 1834, cited in Rifaat (1935: 47) | The ordinance created the Egyptian pound in 1834, but no coins under its provisions were minted until 1836. The gold and silver values may be off by no more than 1%; it is unclear to me whether the gold value was exactly the same as in the next period. Gold alone was accepted in large payments, with the British gold sovereign being the most important coin in circulation. There is an extensive earlier exchange rate history, not described here because it belongs to the premodern period before commercial banks and paper money. Pamuk (2000: 175) has some information on coins and depreciations before 1836. The name "pound" for the currency came from the pound sterling. | |
| 17 November 1885
-2 September 1898 |
fixed; Egyptian £1 = 7.4375g gold, or Egyptian £0.975 = UK£1 | Egypt, khedival (ruler's) decree of 17 November 1885, cited in Rifaat (1935: 47) | Abandoned bimetallism in favor of gold alone as the anchor. The Egyptian pound was in effect linked to the pound sterling. It became a decimal currency, divided into 1000 millièmes. | |
| 3 September 1898
1 August 1914 |
pegged; Egyptian £1 = 7.4375g gold, or Egyptian £0.975 = UK£1 | consequence of Egypt, khedival (ruler's) decree of 25 June 1898, translated in National Bank of Egypt (1948: 17) | Established a central bank, which changed the exchange rate from fixed to pegged. | |
| 2 August 1914
-17 December 1946 |
pegged; Egyptian £0.975 = UK£1 | Egypt, decree of 2 August 1914, translated in National Bank of Egypt (1948: 37) | RR: Parallel market premium against US dollar of 29-31% from January 1946, (when data start)-November 1946 is significantly below premium of pound sterling against dollar. | Ended the convertibility of Egyptian pound into gold following the outbreak of the First World War. In October 1916 the Egyptian government permitted the National Bank of Egypt to consider British Treasury securities as fulfilling gold reserve requirements. The bank's notes remained forced tender after the war. |
| 18 December 1946
-13 July 1947 |
pegged; Egyptian £1 =
3.67288g gold =
US$4.133,
or Egyptian £0.975 = UK£1 |
IMF, 1st Schedule of Par Values, 18 December 1946: 3 | RR: Parallel market premium of roughly 40% tracks premium of pound sterling. | Egypt registered a gold parity with the IMF. |
| 14 July 1947
-17 September 1949 |
pegged; Egyptian £1 =
3.67288g gold =
US$4.133
(or Egyptian £0.975 = UK£1) |
United Kingdom and Egypt, Financial Agreement of 30 June 1947, cited in National Bank of Egypt (1948: 96) | RR: Parallel market premium in mid double digits typially exceeds premium of pound sterling. | Egypt left the sterling area, although the Egyptian pound continued to maintain its former exchange rate with the pound sterling until Egypt's devaluation of 7 May 1962. |
| 18 September 1949
-9 February 1958 |
pegged; Egyptian £1 =
2.55187g gold =
US$2.87156
(or Egyptian £0.975 = UK£1) |
Egypt, government announcement of 18 September 1949, cited in National Bank of Egypt bulletin 1949, no. 3: 107-8 | RR: Parallel market premium typically below 20% until July 1956; then rises to mid to high double digits. De facto crawling band around US dollar from 1950. | Followed the devaluation of the pound sterling on 18 September 1949. Egypt established a 10% tax on certain funds transferred abroad in August 1952--a half step to a dual exchange rate. Egypt established exchange control on transactions with Sudan on 11 February 1953. |
| 10 February 1958
-6 May 1962 |
pegged, dual rate; official rate Egyptian £1 = 2.55187g gold = US$2.87156 (or Egyptian £0.975 = UK£1) | Egypt, government circular of 10? February 1958, cited in National Bank of Egypt bulletin 1958, no. 1: 53 | The second exchange
rate, the "export
pound," was initially a
managed float, then a
peg at a 26% premium
over the official rate
starting 10 March
1958.
RR: Parallel market premium in high double digits. De facto crawling band around US dollar. |
Introduced a second exchange rate. |
| 7 May 1962
-24 July 1971 |
pegged, dual rate; official rate Egyptian £1 = US$2.30 = 2.55187g gold (nominally) | Central Bank of Egypt bulletin, 1962, no. 1: 172 | The second rate was
Egyptian £1 =
US$2.87156.
RR: De facto crawling band around US dollar. RR: Parallel market premium about 80-180% during period. |
Devalued and almost fully unified the exchange rate. Egypt maintained the old gold parity, but it became merely nominal. However, Suez Canal tolls and transactions connected with bilateral trade agreements continued to be paid using the old rate (Egypt, Central Economic Council, Circular No. 37, 16 May 1962, cited in Central Bank of Egypt bulletin 1962, no. 1: 178). |
| 25 July 1971
-25 February 1973 |
pegged, multiple rates; official rate Egyptian £1 = US$2.30 = 2.55187g gold (nominally) | IMF ARER (1972: 139) | Holders of specified
accounts in foreign
exchange could sell to
residents at a premium
over the official rate
(IMF ARER 1972:
135). I infer that the
premium was freely
negotiable and so the
rate was an
independent float.
RR: Parallel market premium often above 200%. De facto crawling band around US dollar. Band width +/-5%. |
Introduced a 35% premium for certain tourist payments. Gold convertibility for all countries ended in practice when the United States abandoned the gold standard on 15 August 1971. Egypt used the US dollar as the anchor then. Egypt did not follow the devaluation of the US dollar against gold on 18 December 1971, but neither did it revalue against the US dollar. |
| 26 February 1973
-31 March 1978 |
pegged, multiple rates; official rate Egyptian £1 = US$2.55555 = 2.55187g gold (nominally) | IMF ARER (1974: 145); Egypt, Ministerial Arrêté No. 477, 28 August 1973, cited in Central Bank of Egypt bulletin 1973, no. 3: 229 | Besides the specified
accounts in foreign
exchange mentioned
above, there was a
parallel market among
banks (IMF ARER
1974: 142).
RR: Parallel market premium in high double digits. De facto crawling band around US dollar. Band width +/-5%. |
Did not follow the devaluation of the US dollar on 13 February 1973. The dual market continued. The gold parity remained on the books but had long been inoperative. The arrêté established a parallel market "where dealings are to be effected in any of the convertible currencies at incentive exchange rates" (Central Bank of Egypt annua report 1973: 12). The parallel market premium rose above 50% by 1976. |
| 1 April 1978
-31 December 1978 |
pegged, multiple rates; official rate Egyptian £1 = US$2.55555 | International Monetary Fund, Board of Governors, Resolution No. 31-4, 30 April 1976 ("Second Amendment") | Certain payments took
place at freely
negotiated rates (IMF
ARER 1979: 141).
RR: Parallel market premium in high double digits. De facto crawling band around US dollar. Band width +/-5%. |
The system of gold par values officially ended by agreement of IMF members. |
| 1 January 1979
-31 July 1981 |
pegged, multiple rates (residual--see Remarks); official rate Egyptian £0.70 = US$1 | Egypt, Minister of Economy, Foreign Trade and Economic Cooperation, Decision No. 372, 27 December 1978, cited in Central Bank of Egypt annual report 1979: 18; IMF ARER (1980: 134, 136-7) | Certain payments took
place at freely
negotiated rates.
RR: Parallel market premium below 20%. De facto crawling band around US dollar. Band width +/-5%. |
Almost fully unified the exchange rate. The dealing spread was Egyptian £0.700-0.707 per US dollar. Different rates continued to apply for some previously arranged transactions under bilateral trade agreements. |
| 1 August 1981
-14 August 1989 |
pegged, multiple rates; official rate Egyptian £0.70 = US$1 (IMF: managed float from 11 May 1987) | IMF ARER (1982: 158, 161) | Certain payments took
place at freely
negotiated rates.
RR: Parallel market premium rising from mid double digits to over 300% over time. De facto crawling band around US dollar. Band width +/-5%. |
Introduced a rate of Egyptian £0.83168 = US$1 for transactions through commercial banks. Introduced a "premium" rate of Egyptian £1.12 = US$1 on 31 March 1984 (IMF ARER 1985: 186). The premium rate was later altered from time to time, until abolished on 24 July 1986 (IMF ARER 1987: 196). On 10 May 1987 a new, fluctuating commercial bank pool rate began operations (Central Bank of Egypt annual report 1987/1988: 41; IMF ARER 1988: 191). Many transactions were transferred from the oficial rate to the commercial bank pool rate, leading the IMF to classify the exchange rate as a managed float. I continue to classify it as pegged because of the official rate, which was the headline rate even if not necessarily the rate at which most transactions occurred. |
| 15 August 1989
-29 January 2001 |
managed float, multiple rates | Central Bank of Egypt annual report 1989/1990: 36 | RR: Parallel market premium falls from over 300% to single digits by early 1994 and stays in single digits or zero until end of data in December 1998. De facto crawling band around US dollar. Band width +/-5%. From 8 October 1991, de facto peg to US dollar. Parallel market premium in single digits to December 1998, when data end. | The central bank devalued its "pool rate" from Egyptian £0.70 to Egyptian £1.10 = US$1, although it was more an accounting change on the books of the central bank than a change in the market rate. On 1 July 1990, the central bank devalued its pool rate from Egyptian £1.10 to Egyptian £2 = US$1 (Central Bank of Egypt annual report 1989/1990: 36). A secondary market was established on 27 February 1991 as part of an exchange rate liberalization (Central Bank of Egypt annual report 1990/1991: 36). The exchange rate in the secondary market was initially Egyptian £3.022 = US$1. On 8 October 1991, the central bank established an administered rate of Egyptian £3.29 = US$1 for certain public sector transactions (Egypt, Ministry of Economy and Finance, Decree No. 491 of 1991, cited in Central Bank of Egypt annual report 1991/1992: 67). On 28 November 1991, the central bank discontinued the administered rate following a deterioration in the balance of payments (IMF ARER 1992: 153). |
| 30 January 2001
-before 30 April 2002 |
band with US dollar, multiple rates | Central Bank of Egypt bulletin 2000/2001, no. 3: 33-4; IMF ARER (2001: 306) | A parallel market
existed with a
premium often about
15% (IMF country
report No. 05/179,
2005: 4).
RR: De facto peg to US dollar to December 2001, when data end. |
The central bank set the central rate at Egyptian £3.85 = US$1. The band was initially +/1%, later widened (see below). Besides the main official rate, two other rates of exchange existed, one applying to certain payments with Sudan and the other to a payments arrangement in liquidation. |
| before 30 April 2002
-28 January 2003 |
band with US dollar | IMF ARER (2002: 310) | A parallel market existed with a premium often about 15% (IMF country report No. 05/177, 2005: 6; 05/179, 2005: 4). | Sometime in the period 31 January 2001-30 April 2002 the central bank unified the exchange rate, bu t IMF ARER does not specify a date. The central bank set the central rate, in terms of Egyptian pounds per US dollar, and the exchange rate band, as follows: 28 May 2001, 3.86, +/-1%; 3 July 2001, 3.90, +/-1.5%; 5 August 2001, 4.15, +/-3%; 13 December 2001, 4.50, +/-3%; 13 January 2002, 4.51, +/-3% (IMF ARER 2002: 314). |
| 29 January 2003
22 September 2003 |
managed float | Egypt, announcement by prime minister, 28 January 2003, in news reports of that date; Prime Ministerial Decree (Decision) No. 183/2003, 29 January 2003, cited in National Bank of Egypt bulletin 2003, no. 1: 92-3 | A parallel market existed with a premium often about 15% (IMF country report No. 05/177, 2005: 6). According to some accounts, the parallel market was larger than the official market. | Floated to avoid exchange rate pressure resulting from an expected war of the United States against Iraq. |
| 23 September 2003
-December? 2004 |
managed float, dual rate | IMF ARER (2004: 314) | De facto band of about Egyptian £6.10-6.26 = US$1 July 2003-29 December 2004. The official exchange rate was in practice a peg to the US dollar from June 2003. An illegal parallel market existed with a premium almost disappearling by June 2004 (IMF country report No. 05/177, 2005: 6). | Introduced a special rate of Egyptian £5.35 = US$1 for key imported foods. Curiously, IMF ARER (2004: 314) continued to classify the exchange rate as unitary. |
| December? 2004
-present (2005) |
managed float | IMF ARER (2005: 319) | The official rate was a de facto band of Egyptian £5.57-5.81 = US$1 from February 2005-November 2005, the latest data I have seen. The parallel market premium was negligible or zero (IMF country report No. 05/177, 2005: 6). | Apparently the dual exchange rate was elminated. In late December 2004 and January 2005 the central bank allowed the currency to appreciate in the new interbank foreign exchange market. after being pegged since June 2003. Egypt abolished repatriation and surrender requirements on 13 December 2004 and accepted Article VIII of the IMF Articles of Agreement on 2 January 2005 (IMF ARER 2005: 323). I date this period as possibly beginning in December 2004 because of the exchange rate liberlization. |