Egypt: New LC measures by Central Bank in line with the latest devaluation of EGP

Hassan Abdu Allah, Governor of the Central Bank of Egypt, stated on October 27th that the ceiling for exclusion of shipments from the instruction of the letters of credit that was since February 2022  for shipments whose values is up to USD 5 thousand has been raised to USD 500 thousand. 


A press release by the Central Bank of Egypt it said that the Central Bank will gradually delete the instructions issued on 13 February 2022 on using documents of credit in funding import processes until they are fully deleted in December 2022. This is considered an incentive that helps support economic activity on the medium term. Furthermore, the Central Bank of Egypt will work on building and developing the financial derivative market with the goal of bolstering the foreign exchange market and raise the level of foreign currency liquidity.

According to the latest measures, the exchange rate will reflect the value of the EGP against foreign currencies through supply and demand in the framework of a flexible exchange rate while giving priority to the main goal of the Central Bank represented in realizing stable prices.

Letter of Credit Pic

In order to support medium-term price stability, the Monetary Policy Committee in its extraordinary meeting has decided to raise both the interest rate and lending interest rate for one night by 200 points to reach 13.25%, 14.25%, and 13.75% successively. In addition, the credit and debit interest rates have been risen by 200 points to reach 13.75%. This aims at containing the inflation pressures emanating from demand, a rise of the growth rates of local liquidity, inflation expectations, and secondary impacts of supply shocks.