Egypt pound steady at dollar sale, sharply higher at exchange bureaux

Reuters , Thursday 10 Sep 2015

Exchange Bureau
A man stands outside an exchange bureau in Cairo December 30, 2012. (Photo: Reuters)

Egypt's central bank kept the pound steady at a dollar sale on Thursday, selling $37.6 million at a cut-off price of 7.7301 pounds per dollar, unchanged from Tuesday.

The cost of the pound nevertheless rose sharply at foreign exchange bureaus.

Two traders at exchange bureaus said the pound was changing hands at 8.20 pounds per dollar while another said it was changing at 8.17 pounds per dollar, both rates sharply higher than Tuesday's rate of 8.05.

One trader attributed the rise to a higher than usual demand for dollars following comments by the investment minister at a conference on Monday that the pound would have to depreciate in light of the global economic crisis.

The central bank released a statement on Tuesday affirming it was solely responsible for determining monetary policy.

The central bank had kept the pound at 7.5301 for five months until July, when it allowed it to slide to 7.6301. On July 5 the bank let it slip a further 0.10 pounds.

In January, the central bank gave banks permission to trade dollars up to 0.10 pounds above or below the official rate, with currency exchange bureaux allowed to trade at 0.15 pounds above or bellow the official rate.

In recent weeks the pound has been trading at exchange bureaus outside the 0.15 band, signalling the return of a parallel market for dollars, though traders say dollar liquidity remains low.

Egypt has sought to tame a once-thriving currency black market with measures such as a cap on dollar-denominated bank deposits.

Allowing the pound to weaken in a controlled way could boost exports and attract investment but it also raises Egypt's already-large bill for imported fuel and food staples.

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