The Egyptian pound is trading in banks at around 16 to the dollar, down from the 13-pound pegged exchange rate before the currency was floated last week.
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Dollars start flowing in Egypt after flotationIt was only half the amount he requested, but for Ahmad, a textile manufacturer in Egypt, the $168,000 he received from the bank to import yarn was almost a year in the making. Egyptian lenders need billions of dollars to meet demand from businesses starved for dollars, no small feat for a banking industry struggling to cope with a hard currency shortage that caused inflation to soar to 14 percent and some key commodities to disappear from store shelves.Banks stayed open throughout the weekend until 9 p.m., buying dollars from customers who saw no incentive to exchange currency illegally after the pound weakened more than 45 percent. The currency crisis drove the government to seek a $12 billion loan from the International Monetary Fund, which demanded action on the exchange rate and lower energy subsidies.The central bank raised its key deposit interest rate by 300 basis points, or 3 percentage points, to 14.75 percent. Several banks followed by offering 18-month local-currency certificates at as much as 20 percent – rates that had depositors lining up to buy.
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