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Tuesday, 13 April 2021

Egypt's Central Bank cuts FX auctions to one a week from three

Reuters , Sunday 20 Mar 2016
The Central Bank of Egypt's headquarters in downtown Cairo (Photo: Reuters)
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Egypt's central bank will from now on hold one foreign currency auction per week, on Tuesdays, when it will sell $120 million, bankers told Reuters on Sunday.

The bank previously held three auctions per week on Sunday, Tuesday, and Thursday when it sold $40 million at each. There was no immediate formal announcement from the central bank.

Egypt devalued the Egyptian pound last week and announced it would shift to a more flexible exchange rate regime which economists and bankers said was likely to see it ultimately scrapping its formal foreign exchange auctions.

The most populous Arab state, which relies heavily on imports, has been facing a dollar shortage since a popular uprising in 2011 drove away tourists and foreign investors, both major sources of hard currency.

It foreign currency reserves more than halved to $16.5 billion in February from around $36 billion in 2011.

The central bank devalued the pound to 8.85 per dollar from 7.73 on Monday and announced it would pursue a more flexible exchange rate. In a special auction on Wednesday it strengthened the pound to 8.78 pounds.

It then raised its key interest rates on Thursday by 150 basis points to curb inflationary pressures, exceeding economists' and bankers' expectations. 

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