The European Bank for Reconstruction and Development welcomed on Thursday the decision of the Central Bank of Egypt to liberalize the exchange rate, saying it is a positive step that will help the country's competitiveness and ease the pressure on its foreign exchange reserves.

Earlier in the day, the central bank of Egypt decided to shift from a fixed exchange rate system to a floating exchange rate system to end for good any trading outside the official market.

"The EBRD welcomes the liberalization of the exchange rate as it is a positive step in the right direction," the development bank said in a statement.

"The currency float and the progress in closing the external financing gap will support progress towards the approval of a $12 billion Extended Fund Facility with the International Monetary Fund (IMF)," it added.

As per the CBE decision, all banks operating in Egypt will be able to set the exchange rate price of foreign currencies in order to end for good any trading outside the official market.

Also, the central bank decided to increase the interest rate on the overnight deposit rate, overnight lending rate, the rate of the CBE's main operation and credit rate by 300 bps to 14.75 percent, 15.75 percent, 15.25 percent and 15.25 percent respectively.

Banks will be allowed to open their branches till 9 p.m. and during weekly vacations to facilitate currency exchange operations, the statement said