Egypt's has reduce in value by nearly 50 percent against the United States dollar, after the central bank announced it would float its currency on Thursday.
The country's central bank said that the decision comes as part of a "home-grown reform program" and that it has the support of the international community.
"This move will allow market demand and supply dynamics to work effectively," it said, according to Bloomberg.
The major decision is being called "unprecedented" and a "surprise" by some. Here's what you need to know.
1. Stocks in Egypt soared after the announcement to float the pound
Stocks jumped to a peak in eight years following the news.
The Egyptian Exchange (EGX) 30 index leaped by more than 8 percent, with many stocks rising their 10 percent daily limits, according to The National. With only a 3.6 percent gain, the EGX 100 didn't fair quite as well.
The central bank reportedly informed bankers that the initial guidance rate for the pound will be 13 pounds to $1. Previously, the official rate was 8.8 pounds to the dollar. On the black market, the currency has depreciated to about 18 pounds to $1.
Reports have suggested the black market rate has improved since the announcement, rising to 15.25 pounds to $1.
2. Interest rates rose
In addition to floating the pound, the central bank announced that it raised its two benchmark overnight interest rates by 3 percentage points.
The bank also said that the country's priority list for imports would be done away with and monetary financing of the budget deficit would be phased out in the coming months.
3. Financial experts expressed initial optimism
The decision to float the pound opens the country to billions of dollars in foreign investment, which will hopefully jumpstart the straggling economy.
"We’ve been expecting this for a long time, and it is very positive,” Rami Sidani, head of frontier investments at Schroders Plc in Dubai told Bloomberg.
“We expect a lot of interest in Egypt, it’s a massive economy that has been put on hold for years.”
"This is very encouraging news. The stock market would love this news because the bottleneck has finally been relieved," a Dubai-based analyst told The National.
4. The move was a demand from the IMF in exchange for a $12 billion loan
Due to Egypt's ongoing economic crisis, the government has turned to the International Monetary Fund (IMF) seeking a $12 billion loan.
But, IMF Managing Director Christine Lagarde told Egyptian officials that they needed address they country's exchange rate issues and curb energy subsidies before the loan could be made.
Lagarde also said that Egypt needed to raise its international bilateral support to $6 billion.
Earlier this week, Bloomberg reported that Egypt and China made a currency swap deal valued at $2.7 billion, moving the country closer to the $6 billion goal. Previously, Egypt secured $3 billion in support from Saudi Arabia and the UAE as well as funds from G7 countries.
5. Average Egyptians are struggling
The country has faced a severe dollar shortage and the pound has suffered. Subsequently, Egyptians have been confronted with rising prices.
The absence of sugar on supermarket shelves and corner shops highlights this. Egyptians are struggling to afford and find the essentials of daily life.
One Egyptian tuk-tuk driver recently achieved viral fame criticizing the government's handling of the economic crisis saying: "Before the presidential elections, we had enough sugar."
"It is shameful for this to happen to Egypt."