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Wednesday, 21 October 2020

Egyptian pound stable at Tuesday's dollar sale, up on black market

Reuters , Tuesday 2 Aug 2016
Dollars for Egyptian pounds at an exchange bureau in Cairo (AP)
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Egypt's central bank kept the pound stable against the dollar at its weekly foreign exchange auction on Tuesday but the currency rose on the black market after remarks by the president that Egypt needs tough measures to turn the economy around.

The bank said it sold $118.8 million at an unchanged rate of 8.78 per dollar, confirming bankers' comment on the currency's level earlier. Two traders said it had strengthened on the black market to between 12.20 and 12.50 per dollar.

Egypt is struggling with an acute dollar shortage that is hampering trade and increasing pressure on the central bank to devalue the currency for the second time this year.

It was devalued by about 14 percent in mid-March in an effort to crush a burgeoning black market, but the black market rate has since depreciated further.

The gap between the official and black market rates reached its widest last month on speculation that the central bank would devalue the pound for a second time.

On Monday, President Abdel Fattah al-Sisi warned Egyptians that tough measures would be needed to turn Egypt's ailing economy around, as the government negotiates a $12 billion loan programme with the International Monetary Fund.

Egypt said last week it was seeking to secure an IMF loan of $4 billion a year at an interest rate of 1 percent or 1.5 percent. The country also plans to issue $2 billion to $3 billion in international bonds over a three-year period.

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