- $500 million offering is first large sale under Governor Amer
- Businesses have been struggling to source hard currency
Egypt’s central bank made an “exceptional” dollar offering to local lenders on Sunday to ease a hard currency shortage, as the pound fell to a new low in black market trading.
The local currency was kept unchanged at the $500 million sale at 7.73 to the dollar, the central bank said. The pound traded at 9.817 per dollar in the black market, according to the average quotes from three currency dealers in Cairo surveyed by Bloomberg, compared with 9.33 per dollar last week.
Sunday’s offering was the first large sale under Governor Tarek Amer, who took charge of the central bank in November. The bank usually offers three sales a week of about $40 million to local lenders. The sale is unlikely to ease the pressure on the pound for long, according to Ziad Waleed, an economist at Cairo-based investment bank Beltone Financial.
“The central bank is doing this to calm the market, there’s huge pressure on the pound in the black market, and this has been highlighted by the press,” Waleed said by phone. “It won’t be a sustainable fix. I think the market is expecting substantial policy reforms."
Seeking to boost hard currency liquidity, Amer in January raised the caps on dollar cash deposits to bring greenbacks from the black market into the official system. He has also taken measures to reduce imports and raised interest rates to make the pound more attractive. Net international reserves have remained stable at about $16.5 billion since September.
Even so, many businesses have been struggling to source the dollars they need to import production materials, leading some to temporarily halt operations and others to consider scaling downtheir local plans. The bank has also intervened to help companies source currency, including airlines British Airways and Emirates.