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EGP stable against dollar in central bank auction, weaker on black market

Ahram Online , Tuesday 11 Oct 2016
A customer counts his US dollar notes in a bank in Cairo, Egypt. (Photo: Reuters)
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The Central Bank of Egypt (CBE) kept on Tuesday the local currency’s rate stable at EGP 8.78 against the US dollar in its weekly forex auction, though the pound has been weakened in the parallel market.

The dollar’s rate on the black market has exceeded EGP 14, Al-Ahram Arabic news website reported on Monday.

The CBE sold $118.4 million out of $120 million offered to banks in an attempt to meet their needs for importing strategic and basic commodities, according to the bank's website.

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

The pound has remained steady against the dollar since a 13.5 percent devaluation in March.

A further depreciation has been expected by several investment banks to tighten the gap between official and informal rates for the US dollar following an initial agreement signed in August between Egypt and the International Monetary Fund (IMF) on a $12 billion fund facility over three years. 

The loan is currently awaiting the approval of the IMF's executive board.

IMF director Christine Lagarde said in a press briefing earlier this week that "there are several prior actions which need to be completed before the board can actually meet in order to formally approve [the loan]," adding that the remaining actions are "in relation to both the exchange rate and in relation to subsidies." 

Egypt’s net foreign reserves rose in September to $19.591 billion up from $16.564 billion in August, the CBE announced last week.

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