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Tuesday, 15 June 2021

Egypt's pound weakens to new low of 7.43 per dollar

Reuters , Monday 26 Jan 2015
Pound
Egyptian pounds (Photo: AP)
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Egypt's pound weakened to 7.43 per dollar from 7.39 at a central bank auction on Monday, the weakest level it has been allowed to reach since auctions began in December 2012.

It was the sixth consecutive official depreciation in the past week, prompted by the gap between the black market and the official rate.

The bank offered 40 million dollars and sold 38.4 million at a cut-off price of 7.4301 pounds per dollar, the central bank said.

The rates at which banks are allowed to trade dollars are determined by the results of central bank sales, giving the bank effective control over official exchange rates.

But there remains an active black market in the pound that is used by businesses and individuals, and the gap between this and the official rate has been widening for months.

The pound was trading at 7.90 to the dollar on the black market shortly after the central bank's auction on Monday, according to one trader. It was quoted at 7.89 after the previous auction last Thursday.

Expectations that the bank will devalue have grown since it announced a surprise 50-basis-point cut in benchmark interest rates earlier this month. The bank said plummeting global oil prices had eased the inflation outlook.

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