CBE keeps EGP unchanged vs dollar, contradicts flotation forecasts

The Central Bank of Egypt (CBE) kept the local currency’s rate stable at EGP 8.78 against the US dollar at Tuesday’s regular forex auction, the bank’s official website showed.

The CBE offered local banks $120 million, of which it sold $118 million in an attempt to meet their greenback needs for strategic and basic imported goods as Egypt—facing a shortage in hard currencies since the 2011 uprising—relies heavily on imports, particularly food.

The dollar’s price set by the CBE on Tuesday defied expectations, by investment banks and local media outlets, of a flotation of EGP that would have tightened the gap between official and informal rates.

Beltone Financial, one of Egypt’s leading investment banks, expected in its report released on Sunday that the central bank would weaken the Egyptian pound to between EGP 11.5 and EGP 12.5 to the dollar from the current official value of 8.78 per dollar.

Beltone’s predictions came after President Abdel-Fattah El-Sisi met with Central Bank Governor Tarek Amer on Friday, which the investment bank described as the “final political endorsement” to the devaluing of the pound.

The dollar’s rate in the parallel market currently ranges between EGP 13.35 and EGP 13.50, Al-Ahram Arabic news website reported on Monday.

In March, the CBE weakened the Egyptian pound by 14 percent of its value against the dollar in an attempt to eliminate the black market, a move that led to price increases.

Source: Ahram online