Egypts central bank governor Tarek Amer told state run Al-Akhbar Daily on Sunday that the recent hike in interest rates should lead the holders of US dollars to buying Egyptian pounds, thereby boosting the pounds value.
On Thursday, the CBE unexpectedly raised its key interest rates by 200 basis points for the second policy meeting in a row.
At the meeting of its Monetary Policy Committee, the bank raised the overnight deposit rate to 18.75 percent from 16.75 percent, and its overnight lending rate to 19.75 from 17.75 percent, after hiking the rates by 200 points each at the last policy-setting meeting in May.
Junes hike is the third since the CBE, hit by growing inflation, raised the interest rate by 3 percent following the November liberalisation of the pound, which helped Egypt secure a three-year $12 billion loan programme from the International Monetary Fund to help it execute its economic reform programme.
With accelerating inflation of around 30 percent in May, more fuel subsidy cuts were introduced in June as part of the governments five-year plan to gradually scrap its fuel subsidy bill from the state budget.
The IMF has said that lowering inflation is key to keeping Egypts reform programme on track, and that raising key interest rates could be an appropriate tool for doing so.
The central bank governor told Al-Akhbar that cash inflow to banks totalled more than $57 billion since the flotation in November.
Amer also said that the countrys foreign reserves were "nearing $32 billion, the highest since the January 2011 revolution."
Last week, the CBE announced that Egypts foreign reserves registered $31.305 billion at the end of June, edging closer to pre-2011 levels.
Egypts foreign reserves registered $36 billion before the 2011 uprising toppled long-time president Hosni Mubarak, leading to a period of political turbulence that dried up Egypts vital sources of foreign currency such as tourism and foreign investment.
