Egypt’s central bank is not moving toward devaluing the pound or floating its currency, a central bank official said in remarks published by the state news agency on Tuesday, as demand for dollars in the black market soared.
“Thinking in this direction is absolutely untrue,” the state news agency quoted the unnamed central bank official as saying, responding to speculation that Egypt might allow the pound to weaken against the dollar.
Egypt, which depends heavily on imports, is facing a foreign currency crisis and is under increasing pressure to devalue the pound, which the central bank is keeping artificially strong at 7.7301 pounds per dollar through weekly dollar auctions.
The country of about 90 million has been starved for foreign currency since an uprising in 2011 drove tourists and foreign investors away. Its reserves tumbled from $36 billion in 2011 to $16.48 billion at the end of January.
The official rate is far from the 9.05 pounds per dollar quoted by black market traders on Tuesday, which had jumped from 8.85 pounds per dollar on Sunday.
In a bid to fight the black market, the central bank had imposed a $50,000 cap on cash deposits a month at banks last year. It recently raised the cap to $250,000 to relieve the pressure on some importers of essential goods.
On Monday, the central bank raised the cap to $1 million for exporting companies, trying to ease restrictions that led to manufacturing components piling up at ports.
He said the central bank had provided more than $14 billion over the past three months to help trade and manufacturing.