Egyptian pound strengthens at forex sale

Cairo - The Egyptian pound strengthened slightly at a central bank sale of foreign currency on Monday, but weakened on the black market.

The pound has stopped strengthening on the black market since political turmoil escalated in Egypt last week, although not by enough to call it a trend yet.

An Egyptian Army soldier takes his position on top of an armored vehicle as he guards in front of the Supreme Constitutional court in Cairo. Credit: AP

The central bank decides the price at which it sells foreign currency at its foreign exchange sales and traders say it is ensuring the pound strengthens to give the impression that the economy is stable and improving despite the turmoil.

The official price of the pound has been appreciating slowly since the July 3 overthrow of President Mohamed Mursi.

Investor confidence, however, has been shaken by events of the past week and the Cairo stock market fell 3.9 percent on Sunday when it reopened after hundreds of people were killed in a crackdown by the army-backed government on supporters of the Muslim Brotherhood. The stock market was down another 0.3 percent on Monday.

The central bank sold $38 million and the cut-off price strengthened to 6.9780 Egyptian pounds per dollar from 6.9790 on Wednesday, the central bank said. The cut-off price on July 3 was 7.0184.

The bank had offered $40 million.

The pound was weaker on the black market, with one dealer saying he was prepared to buy dollars for 7.10 Egyptian pounds and sell them for 7.13 pounds.

Last Monday, the dealer had quoted 7.07/7.10 pounds.

The central bank introduced the currency sales, held three times a week, at the end of December to help stave off a currency crisis and thwart a run on the pound.

Since then, the central bank has allowed the currency to lose more than 11 percent of its value on the official market. The currency's value has been under pressure since the 2011 popular uprising chased away tourists and foreign investors and the dollars they brought into the country. - Reuters