Egypt Independent

Egyptian pound steady in official auction, weaker on black market



Egypt's central bank kept the pound steady at LE7.53 to the dollar at a foreign exchange auction on Sunday while a trader said the currency weakened on the black market.

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

It typically holds auctions every Sunday, Monday, Wednesday and Thursday. Analysts say 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 level as at the last sale held on Thursday.

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.

There is still an active black market, where the pound initially weakened alongside the bank's official depreciations last month, but strengthened once the bank stopped its depreciations on Feb. 2.

A trader on the unofficial market said the pound was changing hands for 7.70 per dollar on Sunday, slightly weaker than the 7.68 quoted on Thursday.

As well as letting the pound depreciate, the central bank gave banks permission late last month to widen the band around the official rate at which they can trade dollars and imposed a limit on dollar deposits in banks.