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Egyptian pound steady on official market, stronger on black market

Egypt's central bank kept the pound steady at LE7.53 to the dollar at a foreign exchange auction on Thursday, while the domestic currency strengthened on the black market.

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

The bank said it had offered $40 million at auction and sold $38.4 million at a cut-off price of LE7.5301 per dollar , unchanged from its last auction held on Wednesday.

Black-market traders said trade has fallen dramatically since the central bank has let the pound weaken and also imposed a cap in February on the amount of dollars that could be deposited in banks.

The limit on deposits discourages use of the black market by depriving those who want to exchange dollars outside official channels of a place to keep their funds.

One trader said the dollar was selling for LE7.63 on the black market on Thursday, stronger than the rate of 7.68/70 quoted on Wednesday after the last central bank dollar auction.

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.

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