Egypt's central bank will hold the pound steady at 8.85 pounds per dollar at an exceptional foreign currency auction on Tuesday, three banking sources told Reuters, a day after the bank devalued the currency.
Egypt, which relies heavily on imports, has been facing an acute foreign currency shortage since a 2011 uprising drove away tourists and foreign investors — two major sources of hard currency. Its reserves have tumbled to US$16.6 billion as of February from $36 billion in 2011.
The Central Bank of Egypt (CBE) said earlier on Tuesday it would sell $200 million at an exceptional auction to finance the import of essential goods.
The pound had been under heavy pressure in recent weeks, weakening to almost 10 to the dollar on the black market as foreign currency liquidity dried up in the banking sector.
CBE has taken various steps this month to divert liquidity back into banks.
Central Bank Governor Tarek Amer, who took over in November, had taken several steps to restore confidence in the pound and make it more attractive to investors before devaluing it and adopting a more flexible approach.
On Monday the bank devalued the pound to 8.85 per dollar from 7.73 per dollar and said it would pursue a more flexible exchange rate. The new rate means banks can buy dollars from customers at 8.9 pounds and sell them at 8.95 pounds.
Egypt's top two state banks, the National Bank of Egypt and Banque Misr, announced on Monday that they will offer Egyptian pound investment certificates with a 15 percent yield in return for foreign currency.
Last week CBE lifted caps on withdrawals and deposits of foreign currencies for individuals and companies importing essential goods, easing the forex controls imposed a year ago that had all but paralysed trade.
