EGP steady at official, stronger on black market

Egypt’s central bank kept the pound steady at 7.53 to the dollar at a foreign exchange auction on Sunday while the currency strengthened slightly on the black market.

The central bank has kept the official exchange rate steady for three months since letting the pound weaken at the beginning of 2015. This step and other measures have helped reduce black market trading significantly.

The bank said it had offered $40 million at auction on Sunday and sold $38.8 million at a cut-off price of 7.5301 pounds per dollar, unchanged from Thursday’s auction.

The rates at which banks are allowed to trade dollars are determined by the results of official auctions, giving the central bank effective control over exchange rates.

The pound was trading at 7.67/68 pounds to the dollar on the parallel market on Sunday, one trader said, slightly stronger than the rate of 7.69 quoted on Thursday.

Black market traders say volumes have fallen sharply since the central bank’s drive to stamp out their transactions, including the introduction of a cap in February on the amount of dollars that can be deposited in banks.

The authorities hope this will signal to foreign investors that the economy has returned to normal after four years of turmoil, but Egyptian importers and exporters say the cap on dollar deposits has reduced foreign exchange liquidity and stifled business activity. (RTRS)