Egyptian pound steady at forex sale, on black market

The bank’s Monetary Policy Committee (MPC) raised benchmark rates by 50 basis points last month, citing inflationary pressures (Courtesy: Andrew Burton/Bloomberg)

Egypt’s central bank kept the pound steady against the dollar at its official foreign currency auction on Tuesday, and the currency also held steady on the black market.

Egypt, which depends on imported food and energy, is facing a dollar shortage and increasing pressure to devalue the pound.

The central bank surprised markets when it strengthened the pound on Nov. 11 by 20 piasters against the dollar and has bucked expectations by holding it steady ever since.

The central bank sold $39.1 million at a cut-off price of 7.7301 pounds to the dollar, unchanged from the previous auction.

The official rate is still far stronger than the black market rate, which was unchanged at 8.58 pounds to the dollar.

The country has been starved of foreign currency since a popular uprising in 2011 ousted Hosni Mubarak and drove tourists and foreign investors away.

Egypt’s reserves have tumbled from $36 billion in 2011 to $16.4 billion, and the country has been rationing dollars through weekly dollar auctions to banks, keeping the pound artificially strong.

In February, the central bank imposed capital controls, limiting dollar-denominated deposits to $50,000 a month in an attempt to fight the black market. The move caused problems for importers who could no longer source foreign currency to clear goods, which piled up at ports.

Last Update: Wednesday, 20 May 2020 KSA 12:04 - GMT 09:04