The Central Bank of Egypt (CBE) held an exceptional foreign exchange auction of $600 million on Sunday. The auction was held for banks to ensure Egypt may continue to import essentials such as wheat, meat and cooking oil. The CBE set a cut-off price of LE 6.8720 to the dollar.
The auction was held so that banks could pass on the fiscal injection to their clients who import staple commodities such as tea, fish, beans, butter, corn and baby milk, components for drugs and vaccines as well as spare parts, the CBE stated.
"The Central Bank is not trying to control the exchange rate," Mohamed Abu Basha, an economist with EFG-Hermes told Ahram Online. "This auction aims at easing the bottle neck among importers before the month of Ramadan."
The auction was 15 times the size of the $40 million currency auctions the central bank has been holding three times a week for the last few months.
The CBE started holding regular foreign exchange auctions at the end of December 2012 as part of an effort to stave off a currency crisis triggered by a run on the Egyptian pound. The run made the pound lose a tenth of its value since the start of the year.