Egypt's central bank (CBE) said it sold $98.7 million to local banks in its last regular forex auction held on Thursday at EGP 14.3.
“A second forex auction on Thursday isn’t expected,” a banker familiar with the matter told Ahram Online, denying media reports that another $4-billion exceptional auction might be held later in the day.
According to the source, who asked to remain anonymous, the CBE will halt its weekly forex auction regularly held on Tuesday, saying it will intervene only when necessary.
“Each bank will decide the exchange rate independently, depending on its foreign currency availability as of Friday,” the source added.
The new dollar price comes as the CBE decided to float the pound and raise key interest rates, in an effort to alleviate the dollar shortage and stabilise the country's flagging economy.
The CBE said it will allow "the supply-and-demand mechanism" to set the prices of foreign currencies, giving local banks the green light to freely change the exchange rate and helping to eradicate trading on the black market.
A Cairo-based currency trader told Ahram Online that the dollar’s rate tumbled to an average of EGP 12.90 on Thursday following the CBE decision, adding that traders are waiting for the final price of the US currency to be set by local lenders.
“The decision was like a blow to the market [parallel]; only traders with foreign cash availability would be able to challenge the central bank’s rate. Others will give up,” the trader told Ahram Online.