CAIRO: Egypt's central bank sold $420 million in the interbank market on Sunday, in an apparent attempt to ensure liquidity in the economy as it moves to eradicate a currency black market and boost investor confidence.
The bank said in a statement that the sale was made to meet outstanding demand for staple commodities, raw materials and pharmaceuticals, but did not give further details.
Central bank governor Hisham Ramez told Reuters the bank would continue to use the interbank market "in the coming period" alongside regular dollar auctions.
Egypt wants to get the pound to a level the market sees as fair, as part of a raft of economic reforms it hopes will burnish its image before a major investment conference later this month.
A shortage of dollars has grown acute in the past four years. Political and economic turmoil after a 2011 uprising disrupted tourism and scared away foreign investment, key sources of foreign reserves.
Businesses have turned to the black market in recent years to meet their dollar needs as supplies of hard currency have dried up at official rates.
Economists and a banking source told Reuters the interbank sale would help partially clear an import backlog at Egypt's ports which has built up since last month when the central bank capped the amount of dollars that can be deposited in banks - one measure aimed at eliminating the currency black market.
"It's partly a confidence game: the more the market starts to realise the banking sector is able to provide foreign exchange liquidity, more the liquidity in the parallel market will start to flow into the banking sector," said Mohamed Abu Basha, an economist at EFG Hermes.
The central bank typically holds dollar auctions of $40 million every Sunday, Monday, Wednesday and Thursday. Sunday's auction did not take place, but Monday's was expected to go ahead as planned.
Earlier this year, the central bank allowed the pound to depreciate after six months of stability, and it has given banks a wider band around the official rate in which to trade dollars.
The pound was steady at 7.53 pounds to the dollar at the last auction on Thursday and was changing hands for 7.68 on the black market.
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