Egyptian pound steady on official market, weaker on black market

CAIRO (Reuters) – Egypt’s central bank kept the pound steady at 7.53 pounds to the dollar at a foreign exchange auction on Sunday, while the domestic currency weakened on the black market.

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

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

Black-market traders said volumes have fallen dramatically since the central bank allowed the pound to weaken and imposed a cap in February on the amount of dollars that can be deposited in banks.

The limit discourages use of the black market because those who exchange dollars outside official channels are deprived of a place to keep their funds.

One trader said the dollar was selling for 7.66 pounds on the black market on Sunday, weaker than the 7.63 quoted on Thursday.

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