News

Central Bank of Egypt Sells $100 Million at Exceptional Auction Following Devaluation

Central Bank of Egypt Sells $100 Million at Exceptional Auction Following Devaluation

The Egyptian Central Bank in Cairo, Egypt. Photo: Eduardo Rossi/Bloomberg News
The Egyptian Central Bank in Cairo, Egypt. Photo: Eduardo Rossi/Bloomberg News

The Central Bank of Egypt sold USD 100 million at an exceptional auction on Thursday following its surprise announcement of its move to float the local currency, state-owned Ahram Online reported.

The CBE set the initial rate at EGP 13 per dollar, allowing banks to trade within a margin of 10 percent above or below the new rate until the auction took place. The CBE also said that banks would have the freedom to bid at the rate of their choosing at the auction and that they would not be bound to the auction rate when dealing in forex with bank customers.

A banker told Ahram Online that the banks will decide their exchange rates “independently depending on [their] foreign exchange availability.”

However, bankers told Reuters earlier that the USD 100 million would not provide banks with enough liquidity to effectively trade on the interbank system and that banks were initially expecting the CBE to offer USD 4 billion at the auction.

Egypt’s central bank floated the local currency in a surprise move early on Thursday, “moving to a liberalized exchange rate regime in order to quell any distortions in the domestic foreign currency market.”

The announcement came after the pound strengthened on the parallel market, where dollars were being sold for between EGP 12 and 15, after leaders from the Federation of Egyptian Chambers of Commerce called for a boycott of the parallel market. Earlier this week, the greenback had reached an all-time high of EGP 18.

The International Monetary Fund, whose final approval for a USD 12 billion loan Egypt is waiting for, said that it “welcomes” the move to devalue the pound.

“This will make more foreign exchange available. The flexible exchange rate regime, where the exchange rate is determined by market forces, will improve Egypt’s external competitiveness, support exports and tourism and attract foreign investment,” the IMF Mission Chief for Egypt Chris Jarvis said in a statement on Thursday.

Egypt Tourism 'Will Recover,' Return to Pre-2011 Levels Next Year: World Travel Council Official
IMF 'Welcomes' Egypt's Currency Devaluation

Subscribe to our newsletter


News

More in News

05black

Egypt’s Foreign Reserves Rise to $US 23 Billion

Egyptian StreetsDecember 6, 2016
1200x-1-1024x697-1

Naguib Sawiris Steps Down as CEO of Orascom in Surprise Resignation

Egyptian StreetsDecember 6, 2016
One of the leaked images allegedly from a Heinz Egypt factory.

Senior Heinz Egypt Employee Arrested After 62 Tonnes of Rotten Tomatoes Found

Egyptian StreetsDecember 6, 2016
sticlute-de-parfum-2

Import Tariffs on 320 Goods Increased by up to 60 Percent in Egypt

Aswat MasriyaDecember 5, 2016
One of the leaked images allegedly from a Heinz Egypt factory.

‘Disgusting Video’ of Ketchup Production Called Misleading by Heinz Egypt

Egyptian StreetsDecember 4, 2016
squashwomen

Egypt’s Women Make Squash History Taking Top Three Spots in World Ranking

Egyptian StreetsDecember 4, 2016
Protesters gather to demonstrate Egypt's decision to declare two Red Sea islands as Saudi Arabian. Khaled Ali, pictured, brought a case to the Administrative Court against the decision. Credit: Belal Darder

Egypt’s Constitutional Court Rules Against Interior Minister Authority to Ban Protests

Aya NaderDecember 3, 2016
pablo-4

Egypt’s Foreign Minister in ‘First Meeting’ Between Arab Official and US Vice President-elect

Egyptian StreetsDecember 1, 2016
Egyptian Streets is an independent, young, and grass roots news media organization aimed at providing readers with an alternate depiction of events that occur on Egyptian and Middle Eastern streets, and to establish an engaging social platform for readers to discover and discuss the various issues that impact the region.

© 2016 ES Media UG. All Rights Reserved.