Egyptian pound steady officially, strengthens on black market

CAIRO: Egypt's central bank kept the pound steady at 7.53 to the dollar at a foreign exchange auction on Monday, but the local currency continued to strengthen on the black market, traders said.

The central bank has now kept the official exchange rate steady for the past two weeks at its auctions, after letting the pound weaken since Jan. 18 in an effort to wipe out black-market trading.

It typically holds auctions every Sunday, Monday, Wednesday and Thursday.

The decision to stabilise the currency may be because the bank does not want the pound to depreciate too far and hopes that other recent measures will have an impact on the black market, analysts said.

The clampdown on the black market comes alongside government efforts to bolster the economy and burnish Egypt's image before a major investment conference next month.

The central bank said it offered $40 million on Monday and sold $38.4 million at a cut-off price of 7.5301 pounds per dollar, the same level as at the last sale, on Sunday.

The rates at which banks are allowed to trade dollars are determined by the results of central bank sales, giving the bank effective control over official exchange rates.

There is still an active black market, where the pound initially weakened alongside the bank's official depreciations last month.

The black market has since stabilised and the pound's unofficial rate has strengthened since the bank stopped its depreciations on Feb. 2.

A trader on the unofficial market said the pound was changing hands for 7.69 per dollar on Monday, stronger than the previous day's quote of 7.73.

Dealers said trade was not affected by political events as Egypt bombed Islamic State targets in Libya on Monday after the group released a video showing the beheading of 21 Egyptian Coptic Christians there.

As well as letting the pound depreciate, the central bank gave banks permission late last month to widen the band around the official rate at which they can trade dollars and imposed a limit on dollar deposits in banks.