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Egyptian pound held steady at auction, firms on black market

Acute dollar shortage hampers trade, increasing pressure on central bank to devalue currency

Published: Updated:

The Egyptian pound was held stable at 8.78 to the dollar at the central bank's weekly foreign exchange auction on Tuesday but strengthened marginally on the black market.

The bank said it sold $116 million at the current rate, confirming earlier comments from bankers.

Egypt is struggling with an acute dollar shortage that is hampering trade, increasing pressure on the central bank to devalue the currency for the second time this year.

The pound was devalued by about 14 per cent in mid-March in an effort to crush a burgeoning black market for dollars, but the black market rate has since depreciated further.

The gap between the official and black market rates reached its widest last week on speculation that the central bank would devalue the pound again.

The pound strengthened marginally on Monday to a range between 12.8-12.9 pounds per dollar, five traders told Reuters on Tuesday, without giving trade volumes. A day earlier traders were quoting up to 13.10 per dollar.

Import-dependent Egypt has faced a dearth of foreign currency since a popular uprising in 2011 and subsequent political unrest drove away tourists and foreign investors, with reserves tumbling from $36 billion that year to about $17.5 billion last month.