CAIRO: The Egyptian pound hit its all-time official low Sunday as it weakened to 7.51 per U.S. dollar at a regular central bank auction, compared to 7.49 at Thursday’s sale.
This is the lowest level the Central Bank of Egypt (CBE) has allowed the local currency to reach since auctions started in December 2012 and it is also the 9th consecutive depreciation, amid expectation of an extended slip in the coming days.
“The bank offered $40 million and sold $38.4 million at a cutoff price of 7.51 EGP per dollar,” the central bank said on its website Sunday.
In a step to tighten its grip over dollar trading on the black market, the Central Bank whose auctions determine the rates at which banks sell the dollar to clients, widened the range in which banks can trade dollars to 10 piasters above or below the official rate, up from 3 piasters. This means that clients could get the dollar at 7.61 EGP.
“The dollar weakened to 7.80 EGP -7.82 EGP at the black market,” a trader said in comments to The Cairo Post.
Some bankers expect the FX auctions and flexible exchange rates could help the central bank combat the active black market and narrow the gap between the official and unofficial prices ahead of the long-anticipated Economic Summit schedule in March.
The Central Bank’s move to let the Egyptian pound depreciate, which started two weeks ago, came shortly after its Monetary Policy Committee decided to cut key interest rates by 50 basis points last week.
Experts say these decisions are aimed at luring fresh foreign direct investments to boost Egypt’s economy which has been stalled by continuing political upheaval since the January 25 Revolution in 2011.