Egyptian pound steady for eighth straight dollar sale

Reuters , Sunday 15 Feb 2015

Egypt sold dollars at 7.53 pounds per dollar on Sunday, the eighth central bank auction this month, as the pound weakened slightly on the black market.

The bank began letting the official exchange rate weaken on Jan. 18 in an effort to wipe out black-market trading, but it has kept the rate steady for two weeks now.The bank's moves to pressure the black market come alongside government efforts to bolster the economy and burnish Egypt's image before a major investment conference next month.

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

There is still an active black market, where the pound initially weakened alongside the bank's official depreciations. The black market has stabilised and recently strengthened since the bank stopped its depreciations last week.

A trader on the unofficial market said the pound was changing hands for 7.73 per dollar on Sunday. That indicated a slight weakening since Thursday, when one trader said the pound was going for 7.725 and another put the rate at 7.71.

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 limit on dollar deposits in banks.

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