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Can Egypt’s new central bank chief calm currency crisis?

Fresh blood at the top has raised hopes of impending change to a monetary policy that has failed to stabilize the pound

Published: Updated:

When Egyptian central bank governor Hesham Ramez quit, phones began ringing as bankers congratulated each other on the departure of a man they say refused to change course even as Egypt careered from currency crisis toward trade crisis.

Fresh blood at the top has raised hopes of impending change to a monetary policy that has failed to stabilize the pound, has angered importers and become personally associated with Ramez, whose currency controls have starved some businesses of dollars.

His named successor, Tarek Amer, who begins his four-year term on Nov. 27, is seen as a dynamic and collaborative manager credited with transforming the fortunes of Egypt’s largest bank.

Both bankers and importers have welcomed President Abdel Fattah al-Sisi’s announcement; they are more comfortable with Amer’s approachable style and say his arrival gives the central bank an opportunity to row back on existing policies without losing credibility.

“We were not going in the right direction and we are in a critical situation that requires out-of-the-box thinking,” a banker at the treasury desk of an Egyptian bank said.

“There is optimism in the market that Amer will reverse some of the controversial policies that Hesham Ramez took.”

Ramez took the helm at the central bank in February 2013, when the Muslim Brotherhood-led government was struggling to stabilize an economy hit by political turbulence in the wake of the 2011 uprising that swept Husni Mubarak from power.

Foreign reserves at the time were $13.6 billion, less than half their pre-uprising level and not enough to cover three months worth of Egypt’s import needs.

The military removed the Brotherhood from power three months after Ramez took office, quickly securing billions of dollars in aid from Gulf Arab states who opposed to the Brotherhood.

The money came in the form of grants, loans, central bank deposits and even energy products which Egypt imports.

Yet foreign reserves were only marginally higher at $16.3 billion in September than they were when he took over.

That is because tourism and investment are down but also because the central bank has dedicated much money to maintaining the pound at what analysts say is an artificially strong band.