Egyptian pound steady for fourth sale, stronger on black market

Reuters , Sunday 8 Feb 2015

Ahead of investment conference in March, economic reforms are being implemented to encourage foreign investment

Egyptian Pound
Egyptian Pound (Photo: Reuters)

Egypt's pound was sold at 7.53 per dollar for the fourth central bank auction in a row on Sunday, steadying after a fall that started in mid-January, and was stronger on the black market.

The Central Bank has let the official exchange rate weaken since Jan. 18 in an effort to wipe out black market trading of the currency. The change is among economic reforms to reinforce a nascent economic recovery and burnish Egypt's image ahead of an investment conference in March at which it hopes to attract foreign investment.

The central bank said it offered $40 million for sale on Sunday and sold $38.4 million at a cut-off price of 7.5301 pounds per dollar, the same as a sale on Thursday.

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.

It was unclear whether the Central Bank would allow the pound to weaken further.

There remains an active black market although the pound has strengthened on it and the gap between the official and unofficial exchange rates has narrowed in recent days.

A trader on the unofficial market said the pound was changing hands for as little as 7.74 per dollar on Sunday, much stronger than the rate of 7.90 quoted on Thursday.

As well as letting the pound depreciate, the Central Bank gave banks permission late last month to widen the band around the official rate at which they can trade dollars, and imposed a cap on dollar deposits in banks.

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