Egyptian pound steady at dollar sale, weaker at parallel market

Reuters , Wednesday 28 Oct 2015

The Egyptian pound was stable at a dollar sale on Tuesday as the central bank sold $37.8 million at a cut-off price of 7.9301 pounds per dollar, but weakened on the parallel market.

The official cut-off price was unchanged from Sunday's dollar sale but one trader said the dollar changed hands at 8.30 pounds in the parallel market on Tuesday compared with 8.25 pounds to the dollar on Sunday.

Egypt announced last Wednesday that central bank governor Hesham Ramez will be replaced by senior banker Tarek Amer, in a move welcomed by traders who expect a new approach to help ease the country's currency crisis.

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

The central bank gave permission in January 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 below the official rate.

The central bank kept the pound at 7.5301 for five months until July and then allowed it to slide to 7.7301. This month it let it weaken by another 0.20 pounds to 7.9301.

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

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