Egyptian pound steady at auction, stronger on parallel market

Egypt’s central bank held the Egyptian pound steady at 7.73 per dollar for the third straight foreign exchange auction on Sunday after a depreciation earlier this month. The currency strengthened on the parallel market.

The central bank said it had offered $40 million and sold $37.5 million at a cut-off price of 7.7301 pounds per dollar, unchanged from Thursday’s rate.

The central bank had held the pound at 7.5301 for the past five months until earlier this month, when it allowed it to weaken to 7.6301. Last Sunday, the bank let it slide a further 0.10 pounds.

Analysts say letting the pound weaken in a controlled way could boost exports and attract further investment, but also raises Egypt's large bill for imported fuel and food staples.

Egypt has sought to tame a once-thriving currency black market with measures such as a cap on dollar-denominated bank deposits.

The pound strengthened on the parallel market. One currency trader said it was changing hands at 7.87 to the dollar while another said the rate had reached 7.85 pounds, both stronger than the 7.95/97 quoted on Thursday.

The central bank gave banks permission in January to trade dollars up to 0.10 pounds more or less than the official rate, with an extra 0.05 pounds for currency exchange bureaus.