Egyptian pound holds steady against dollar

Reuters

Egypt’s central bank kept the pound steady against the dollar at its official foreign currency auction on Tuesday, central bank data showed, and the currency was stable on the black market.
The central bank sold US$118.6 million at a cut-off price of 8.78 dollar, unchanged from last week.
The central bank has kept the pound artificially strong since it devalued the currency in March to 8.78 per dollar from 7.7301 and announced a more flexible exchange rate policy.
Dollars are rationed through weekly auctions and imports of essential goods get priority. A shortage of dollars in the formal banking system since a 2011 uprising that drove away tourists and foreign investors, key sources of hard currency, has made it difficult for import businesses. Many of them now rely on a black market where they can procure currency for a higher price.
The rate on the black market has grown weaker since the March devaluation, at which time it was roughly in line with the official rate.
One currency trader cited 11 pounds per dollar as the black market rate on Tuesday, unchanged from last week.
An EgyptAir plane crash in the Mediterranean earlier this month has threatened to further damage the tourism industry. That was the third blow since October to hit Egypt’s travel industry.
Foreign reserves have more than halved since 2011 to stand at US$17.01 billion at the end of April.