Egypt’s black market in US dollars appeared to screech to a halt Wednesday, as traders struggled to compete with a plunge of as much as 14% in the official rate for the local currency.
As the yawning gap between the official and parallel market rates for Egypt’s pound dwindled by early afternoon in Cairo, a number of traders said they were pausing operations and waiting until the end of the day to assess the situation.
The Egyptian currency depreciated to a record of around 32.1 on the official market, roughly the black market rate, before paring losses to close at 29.8 per dollar.
READ: Egypt’s Latest Devaluation Rages On, Converging on Parallel Rate
The halt suggests initial success in the North Africa nation’s attempt to stamp out a parallel market that’s emerged amid the country’s worst foreign-currency crunch in years. Egypt has signaled it’s committed to a flexible exchange-rate policy, a move that helped it secure a $3 billion International Monetary Fund deal to shore up an economy hit hard by Russia’s invasion of Ukraine.
A state crackdown on the black market in the past two weeks, with a series of arrests of traders reported in the local press, had also undercut operations.
The IMF warned in a report Tuesday that the durability of Egypt’s shift to a flexible exchange rate “remains to be proven and the central bank may face political and social pressure to reverse course.”