Tue, Feb 12, 2013 - Page 5 News List

Egyptians turning to black market for hard currency

Reuters, CAIRO

The weighted average bid at those auctions has been setting the official exchange rate in banks and foreign currency bureaus. Banks had been allowed to buy or sell US dollars or their equivalent to other banks in a band of 0.5 percent above or below the average bid at the auction.

On Monday last week, the central bank narrowed the band, setting a limit of 0.01 pounds above or below the weighted average bid.

Dealers say the currency has recovered somewhat since hitting a black market low of around 7.5 pounds to the US dollar late last month.

However, some forecast that the pound could come under further pressure with political instability pushing back the prospects of Egypt concluding a deal with the IMF seen as vital to securing a US$4.8 billion loan.

“The current FX management framework could continue to play for time, though [the Egyptian pound] will remain vulnerable in the meantime,” Bank of America Merril Lynch said in a report last week. “Domestic US dollar demand is likely to strengthen and the gap between the official and parallel rates is likely to widen.”

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