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Egypt pound holds big gains vs dollar after huge central bank dollar sale

imageCAIRO: The Egyptian pound held onto big gains against the dollar on the black market on Tuesday, a day after the central bank sold $1.5 billion at its largest ever exceptional foreign currency auction, traders said.

Two market participants told Reuters on Tuesday the dollar has been offered for 7.20 to 7.25 pounds since the central bank auction. Before the central bank restocked the market with much-needed dollars, the dollar had been offered for around 7.37 Egyptian pounds on the black market.

A central bank official said on Monday the timing of the auction was important in light of the price of the dollar in the black market and the volume of orders at banks to provide for strategic products.

The auction, which ended with a cut-off price of 6.9518 pounds to the dollar, dwarfed the $40 million currency sale Egypt holds three times a week. It was also larger than the $1.3 billion the central bank offered at its last exceptional auction in September.

A shortage of dollars has hampered importers as well as fuelling an unofficial currency market.

Regular currency auctions began during ousted president Mohamed Mursi's year in office, helping support the pound as tourists and investors took their hard currency elsewhere.

Copyright Reuters, 2014