Egyptian pound stronger on black market amid uncertainty

Ahram Online , Wednesday 2 Nov 2016

Egyptian pounds (Photo: AP)
Egyptian pounds (Photo: AP)

Egypt’s local currency has been noticeably strengthened against the US dollar on the black market on Wednesday amid expectations of upcoming measures by the government to control the exchange rate.

On Monday, Prime Minister Sherif Ismail announced in parliament that the central bank will issue new measures regarding the exchange rate, without adding further details.

A trader in Cairo who asked to be anonymous told Ahram Online that “the dollar’s rate has been significantly declining over the past two days, from EGP 18.40 on Monday to EGP 17.50 on Tuesday, and finally EGP 15.25 today.”

“The black market is now seeing uncertainty, forcing traders to temporarily abstain from selling or buying dollars,” said the trader, who attributed the parallel market’s confusion to the recently announced currency swap deal with China and the projected devaluation ahead of a $12 billion loan from the International Monetary Fund (IMF).

The pound has held steady against the dollar at 8.78 at the Central Bank of Egypt’s weekly auctions since a 13.5 percent devaluation in March.

The Egyptian Federation of Chambers of Commerce also called on the member merchants on Tuesday to refrain from dealing with the parallel market for two weeks and to reduce their imports – excluding essential commodities – in the next three months in an attempt to eradicate the black market.

The federation’s chairman, Ahmed Al-Wakil, was cited by MENA as saying on Wednesday that the initiative has helped reduce the greenback’s rate by two Egyptian pounds.

Egypt, which has faced a shortage in hard currency since the 2011 uprising, relies heavily on imports of staple foods to feed its population of 90 million.

Earlier this week, Egypt reached a currency swap agreement with China valued at $2.7 billion, according to a Central Bank of Egypt official cited by Bloomberg news agency.

In August, Egypt reached an initial agreement with the IMF over the $12 billion loan programme.

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