Egypt’s central bank to hold foreign exchange auctions once a week

Egypt’s central bank will from now on offer one foreign currency auction per week, on Tuesdays, when it will sell $120 million, bankers told Reuters Sunday. There was no immediate formal announcement from the central bank.

The bank previously held three auctions per week on Sunday, Tuesday, and Thursday when it sold $40 million at each.

Egypt devalued the Egyptian pound last week and announced it would shift to a more flexible exchange rate system which economists and bankers said was likely to see it ultimately scrapping its formal foreign exchange auctions.

The most populous Arab state, which relies heavily on imports, has been facing a dollar shortage since a popular uprising in 2011 drove away tourists and foreign investors, both major sources of hard currency.

It foreign currency reserves more than halved to $16.5 billion in February from around $36 billion in 2011.

The central bank devalued the pound to 8.85 per dollar from 7.73 on Monday and announced it would pursue a more flexible exchange rate. In a special auction on Wednesday it strengthened the pound to 8.78 pounds.

It then raised its key interest rates on Thursday by 150 basis points to curb inflationary pressures, exceeding economists’ and bankers’ expectations.

Source: Reuters