Egypt Pound Barely Changed At C.Bank Sale, Weaker On Black Market

The Egyptian pound was unchanged at a central bank dollar sale on Thursday but weakened on the black market, ahead of a central bank meeting a day after Egypt elected former army chief Abdel Fattah al-Sisi as its new president.

Sisi, who toppled Egypt’s first freely elected leader last July following mass protests, took more than 90 % of the vote and joins a long line of leaders drawn from the military, although voter turnout was unexpectedly low.

Egypt’s central bank may cut interest rates on Thursday to boost an economy damaged by three years of social and political upheaval that has unnerved foreign investors and tourists and led to dollar shortages and fuelled a thriving black market.

The central bank said it sold USD 37.6 m at a cut-off price of 7.1404 pounds, fractionally weaker than the 7.1403 pounds at its last sale on Wednesday. It had offered USD 40 m.

Forex traders and economists have described the central bank’s decision to allow the pound to gradually weaken as a managed depreciation. The central bank has not said why it has let the currency weaken in recent weeks.

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

One black market trader put Thursday’s rates at 7.50/53 pounds to the dollar, weaker than Wednesday’s rates of 7.45/48.

A weaker currency could help the country’s economy, currently growing around 2 %, by making Egyptian exports more competitive, economists have said.

Source: Reuters