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CAIRO / Reuters
Egypt’s pound was almost steady early on Sunday as banks began trading freely for the first time since authorities ditched the currency’s peg in a policy shift designed to crush a black market and clinch an International Monetary Fund loan.
Interbank trading began at 1030 a.m. (0830 GMT) but activity was extremely slow because banks were uncertain about the prospects for supply and demand of US dollars.
The pound weakened slightly from 15.50 against the dollar on opening to 15.75 in the first 75 minutes.
Banks were bidding around 15.60 per dollar and offering around 16.00. The pound had closed at 15.35 on Saturday.
Despite the slow start, Egyptians are braced for a currency rollercoaster in coming days and weeks, with many expecting further depreciation of the pound as banks struggle to meet an anticipated deluge of pent-up dollar demand from companies that struggled for two years to secure hard currency from the banks.
“People do not know how to trade FX in a free market yet. I’d say it will touch 18 before the end of the day if anyone is offering,” said one banker. “Activity will pick up tomorrow, irrespective of what happens today.”
Egypt floated its currency on Thursday, initially devaluing it by about a third from its peg of 8.8 to the dollar and then letting the currency drift weaker.