CAIRO: Egypt’s central bank said on Thursday it had raised interest rates by 200 basis points in an exceptional meeting of its monetary policy committee.

The central bank set the overnight lending rate at 14.25% and the overnight deposit rate at 13.25%. The war in Ukraine has deepened Egypt’s economic woes, boosting the import-reliant nation’s bills for wheat and oil while crushed tourism from two of its largest markets, Ukraine and Russia, a key source of hard currency.

In its statement on Thursday the bank said the conflict had “dire economic ramifications” and consequently led Egypt to weather large capital outflows.

Separately, the bank said it would also begin the process of gradually repealing a directive implemented in March mandating the use of letters of credit to finance imports and would aim to remove it entirely by December.

The directive has created a bottleneck for many importers, with data from the country’s statistics agency showing a 57% drop in imports of consumer durables between April and June.

Saudi index tracks oil drop; Egypt up on tax-break prospects

The country’s pound currency strengthened slightly to 19.65 against the US dollar following the bank’s interest rate hike, before weakening again to its opening level of 19.67, data from Refinitiv showed.