Egypt's central bank kept the Egyptian pound steady against the dollar at Tuesday's weekly auction of foreign currency, but the pound weakened on the black market as the currency crunch worsened.
The central bank sold $118.4 million at the regular dollar sale, with the cut off price stable at the official rate of 8.78 per dollar. Black market traders said they were selling dollars at 15 per dollar, weaker than last week's range of 14.20-14.25 per dollar. They did not give volumes of trade.
Egypt is under pressure to devalue the pound, which economists say is overvalued. Speculation is rife that the central bank could devalue the pound any day to close the gap with the black market rates.
"An aggressive devaluation is right around the corner, with the possible timeframe being as soon as this week and as late as end of October," Arqaam Capital said in a report on Tuesday.
Egypt had roughly $36 billion in reserves before a 2011 uprising that ushered in a period of turmoil, scaring off tourists and foreign investors, key sources of hard currency.
The acute shortage in foreign currency has hit businesses and discouraged investment over the past few years as companies struggle to pay for imports and repatriate profits.
Egypt has secured a staff-level agreement with the International Monetary Fund over a $12 billion 3-year loan programme but has yet to obtain IMF board approval.
IMF chief Christine Lagarde said on Saturday that Egypt would have to take action on the exchange rate and subsidies before the board could sign off on the loan.
