Egyptian pound stable at central bank sale but stronger on black market
The Egyptian pound was stable at Tuesday’s foreign currency sale but strengthened slightly on the black market, a day after a five-day visit by Saudi Arabia’s King Salman saw the signing of billions of dollars worth of investment projects.
Egypt’s central bank sold $120 million at the rate of 8.78 pounds to the dollar at its regular sale which it holds every Tuesday.
Egypt, which relies heavily on imports, has been facing a dollar shortage since the popular uprising in 2011 drove away tourists and foreign investors, major sources of hard currency.
The pound strengthened on the black market with traders giving a range of 10.25-10.28 per dollar compared with the rate of 10.30 per dollar a week earlier.
A black market for dollars has sucked up liquidity from the banking system while the central bank kept the pound artificially strong and rationed dollars through weekly auctions, putting a strain on foreign reserves.
Egypt’s reserves more than halved to $16.56 billion in March from around $36 billion in 2011.
In an attempt to close the gap between official and black market rates, the central bank devalued the currency to 8.85 per dollar from 7.7301 last month. It later strengthened it to 8.78 per dollar, while adopting a more flexible exchange-rate policy.