Dollar hits ten Egyptian pounds as currency crisis worsens

Egypt has been struggling to revive its economy since a 2011 uprising drove major sources of foreign currency such as foreign investors and tourists away.

MENA

2 min read

The New Arab

08 March, 2016

Limitations on foreign currency have had a disasterous effect on the Egyptian pound [Getty]

Egypt is pumping hundreds of millions of dollars into its local markets in an attempt to rescue the plunging pound, which threatens to disrupt the whole economy.

The exchange rate of the US dollar in Egypt continues to rise, climbing for the first time ever above 10 Egyptian pounds per dollar in the black market.

Hopes that it might level off significantly from the central bank's $500 million injection into the local currency market over the past few days have not been met.

The official rate set by the central bank in dealing with local banks is 7.73 pounds per dollar, while the banks buy it at 7.78 pounds and buy it at 7.83 pounds.

Sources dealing in the greenback currency said the rate on the market was between 9.9 and 10.10 pounds per dollar by Monday night.

The central bank injected $500 million into the banking system in an exceptional auction to support the import of basic commodities.

On Tuesday the pound strengthened slightly on the black market, with two traders quoting rates of 9.60/9.70 to 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 has kept steady at 7.73 pounds to the dollar since November.

The currency has been depreciating rapidly on the black market in recent weeks and was hovering around 9.87 to the dollar just before Sunday's exceptional auction.

At its regular auction on Tuesday the central bank sold $38.8 million at a cut-off price of 7.7301 pounds to the dollar on Tuesday, unchanged from the previous auction.

Egypt has been starved of foreign currency since an uprising in 2011 ousted autocrat President Hosni Mubarak but drove away tourists and foreign investors - major sources of hard currency.

A year ago, the central bank imposed strict controls on hard currency movements, which helped ease this trend.

But the currency shortage has made it harder for companies to operate in the country and forced many to resort to the black market for their dollar needs.

Agencies contributed to this story.