Egypt's pound steady on official auction and black market

CAIRO: Egypt's central bank kept the pound steady at 7.53 pounds to the dollar at a foreign exchange auction on Thursday, while the pound stayed stable on the black market.

The central bank said it offered $40 million on Thursday and sold $38.4 million at a cut-off price of 7.5301 pounds per dollar, unchanged from the last auction on Wednesday.

The central bank has now kept the official exchange rate steady for more than a month after letting the pound weaken in an effort to wipe out black market trading.

The pound was steady on the parallel market on Thursday, with one trader saying the dollar was selling for 7.66 pounds, the same as the rate quoted Wednesday. Analysts say the central bank may have decided to stabilise the currency to stop it from depreciating too much and because it hopes other recent measures will have an impact.

The central bank cancelled a regular dollar auction on Sunday and instead sold $420 million in the interbank market.

Economists said the move was intended to ensure liquidity in the economy as Egypt moves to eradicate a currency black market and boost investor confidence.

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

As well as letting the pound depreciate, the central bank gave banks permission late last month to widen the band around the official rate at which they can trade dollars and imposed a limit on dollar deposits in banks.