Egypt’s Central Bank Reaffirms Commitment to Flexible Exchange Rate Policy

Egypt’s central bank governor Hassan Abdalla reaffirmed the country’s commitment to maintaining a flexible exchange rate regime, underscoring its role in strengthening the economy’s resilience to external shocks.

Speaking via video conference during a regional meeting of central bank governors and finance ministers from the Middle East, North Africa, Afghanistan, and Pakistan (MENAP), held on the sidelines of the IMF–World Bank Spring Meetings 2026, Abdalla highlighted the progress Egypt has made under its ongoing economic reform program.

He noted that since 2024, Egypt has implemented key reforms, including the adoption of inflation targeting and a flexible exchange rate system. These measures have contributed to a sharp decline in inflation, from a peak of 38% to 11% in January 2026, alongside a surge in international reserves, which reached a record $53 billion by the end of March.

Abdalla emphasized that the flexible exchange rate policy remains central to absorbing external shocks, particularly amid ongoing regional conflicts and global geopolitical tensions. He pointed to the recent recovery of the Egyptian pound, which regained nearly 50% of its previous losses within days, supported by improved foreign currency inflows and easing regional conditions.

“The developments reflect improved economic flexibility and growing confidence in Egypt’s long-term reform trajectory,” Abdalla said, adding that the central bank stands ready to take necessary measures to anchor inflation expectations and maintain macroeconomic stability.

He also highlighted the increasing the economy's ability to adapt with global disruptions, attributing this resilience to sustained structural reforms and enhanced policy frameworks.

The governor stressed the importance of international cooperation in ensuring adequate liquidity to confronting external shocks, pointing to the critical role of the International Monetary Fund in supporting member countries, particularly during prolonged periods of instability.

The MENAP forum serves as a key platform for regional policymakers and international partners to coordinate responses to shared economic challenges, with this year’s discussions focusing heavily on the impact of geopolitical instability and avenues for strengthening supportIMF programs across the region.