The Central Bank of Egypt (CBE) raised the number of weekly bids for the dollar (known as the FX auction) from three to four tenders.
Normally the bids were raised every Monday, Wednesday and Thursday, but this week the CBE issued another bid on Sunday, with an offering of 40m.
In the upcoming weeks the bank will raise bids of 40m four times a week, to supply a total of 160m, instead of 120m.
The decision came after the CBE met with a number of treasury officials from banks, Saturday. During the meeting, discussions concerning the current market conditions and the effect of the rise in the US currency on the market were raised.
Fakhry El-Fiki, Professor of Economics at Cairo University and former assistant to the executive director of the International Monetary Fund (IMF), told Daily News Egypt that the initiative from the CBE is to the result of two main causes. The first is due to the shortage in dollar liquidity that was facing the official market in Egypt. Thus, the bank took this decision in an attempt to saturate the market and fulfil its needs.
The second reason, he said, is to reduce the actions made in the parallel, unofficial market, which involve setting higher prices as the demand for the dollar increases and the supply decreases in the official market.
El-Fiki also added that during the IMF’s visit to Egypt, they advised the government to work on unifying exchange rates as the gap between the rates issued in the official and unofficial markets is too big.
According to CBE, the dollar buying price is EGP 7.1453 while the selling price is EGP 7.1779. The price for the FX auction rate on the other hand stands at 7.1401.
Source: Daily News Egypt & MENAFN