Economists say EGP swings are the flexible regime working as designed, not a stability threat

How much FX volatility is too much?

A new kind of balancing act:

Swings are the system working

Normal volatility, not policy failure:

A natural consequence of abandoning exchange-rate targeting

Flexibility itself does macroeconomic work

When to be concerned

When intervention is warranted:

The sensitivity is structural

The EGP has grown more reactive to global developments because of the flexibility system’s structure

Oil is the other short-term driver, given Egypt’s import bill

Hot money can’t anchor stability

Competitive beats strong

A weaker EGP cuts both ways:

Exports alone won’t strengthen the currency

Navigating the swings

Economists credit policymakers with holding macro stability through an unusually hard external environment international reserves near USD 55 bn

The economists’ recommendation: