Egypt Pound Weakens At Forex Auction

The Egyptian pound weakened at a foreign exchange auction on Wednesday, the central bank said.

The central bank sold $38.6 million to banks at the auction, with a cutoff price of 6.8869 pounds to the dollar, weaker than the 6.8767 at the previous sale on Monday.

The average midpoint of three black market rates cited by market participants was 7.40 pounds to the dollar – around levels cited on Tuesday but some 6 piastres weaker than the level cited by one dealer on Monday.

The central bank introduced dollar currency sales a year ago to help counter a run on the pound. It has burned through at least $20 billion – or roughly half its reserves – supporting the currency since Egypt’s 2011 revolution, which cut into tourism revenues and foreign investment.

The central bank has limited Egyptians from transferring more than a cumulative $100,000 out of the country since the 2011 uprising unless they can demonstrate a pressing need for the funds. Many wealthier Egyptians have reached their limit and are no longer able to send funds abroad.

In January, this limit will be raised by another $100,000, Central Bank governor Hisham Ramez said this month.

Depositors at banks can only withdraw a maximum of $10,000 in foreign currency per day under central bank rules, but in practice many banks restrict such withdrawals to much less and demand documents to show why the client needs the funds.

Source: Reuters