Plan Egyptian Central Bank To allow the launch of new currency derivatives in order to unleash liquidity in the local market, and to provide tools to hedge once morest the risks to which it is exposed pound After it fell to a record level.
Under the plan, local banks will offer non-deliverable local (pound) contracts called “NDF”, as well as options that allow companies and first-time investors to bet or hedge once morest fluctuations in the Egyptian currency, according to people with direct knowledge of the matter.
The goal is to build a more credible and transparent local market to make predictions regarding currency movements, according to people who asked not to be identified because the information is not public.
The plan aims to provide local companies with a way to protect once morest large fluctuations in the pound if Egypt adopts a lower (official) exchange rate. So far, local banks in Egypt only adopt the spot exchange rate.
It is noteworthy that having greater currency flexibility has been one of the main issues in Egypt’s talks with the International Monetary Fund as it approaches an agreement. Egyptian officials will head to Washington next week to participate in the annual meetings of the International Monetary Fund and the World Bank.
Other details of the plan remain unclear. Central bank officials might not be reached for comment.
