CAIRO: Egypt’s central bank sold fewer dollars to banks Wednesday than in a previous auction and the pound gained for the second time in three days as authorities battle to halt a slide of its currency into crisis.
The central bank imposed a new tighter trading band for the pound Monday and it also surprised traders Wednesday by announcing an extra auction Thursday – both possible reasons for a rise in the pound on the interbank market after the sale.
But among unlicensed foreign currency dealers in Cairo, the pound is trading at least several piastres weaker than the official rate – signaling that the currency is still under pressure.
“Interbank trading is limited by the auction price. Banks cannot exceed it ... Also trading between banks is light,” one trader, speaking on condition of anonymity, said.
By 1123 GMT, the pound had risen on the interbank market to trade at 6.69 to the dollar compared to 6.70 just before the result was announced.
The currency has lost around 8 percent since the bank changed its currency regime in December to avoid an outright currency crisis and figures Tuesday showed Egypt’s reserves of dollars and other hard currency have fallen to $13.6 billion – enough to pay for less than three months worth of imports.
Inflows of dollars to its economy have slumped after two years of violence that has scared off tourists and investors alike and made it harder for many businesses to operate.