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Egypt's pound steady at official auction, unofficial rate virtually eliminated

Reuters , Thursday 26 Feb 2015
 U.S. dollar
An employee of a money changer counts U.S. dollar notes for a customer at a bank in Cairo, December 31, 2013 (Photo: Reuters)
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Views: 1872

Egypt's central bank (CBE) kept the pound steady at 7.53 to the dollar at a foreign exchange auction on Thursday, while the unofficial rate currency strengthened slightly on the black market enough to eliminte gap between the rates in both worlds.

The central bank has now kept the official exchange rate steady for more than three weeks after letting the pound weaken in an effort to wipe out black market trading.

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.

As part of recent policies taken by the central bank to eliminate the black market, the CBE widened the band around which banks are allowed to trade to 10 piasters and other traders to 15 piaster.

A trader on the unofficial market said the pound was changing hands for 7.68 per dollar on Thursday, slightly stronger than the 7.69 quoted Wednesday.

The central bank typically holds auctions every Sunday, Monday, Wednesday and Thursday. Analysts say that the central bank may have decided to stabilise the currency to stop it from depreciating too much and because it hopes other recent measures will have an impact.

The government is trying to bolster the economy and burnish Egypt's image ahead of a major investment conference next month.

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

It also put limits for dollar deposits in banks, a policy which lead to higher dollar proceeds for banks.

*This article has been edited by Ahram Online.

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