Egypt's central bank said Tuesday that it would sell $1.5 billion to help importers in the latest step to tackle a dollar shortage, days after devaluing the Egyptian pound. The moves come as Egypt, facing a raging jihadist insurgency, reels from a slump in tourism and investment that has hit foreign currency inflows.
On Monday, the bank devalued the pound by 14.3 percent, to 8.95 to the dollar.
The Central Bank of Egypt said the "exceptional auction" of dollars planned for Wednesday was aimed at helping importers meet their payments.
Analysts said the step would further help to maintain a supply of the US currency in the market.
In the past few months, the local currency had often traded at a rate of almost 10 pounds to a dollar on the black market. But following the devaluation, "the spread between the black and official market for Egyptian pounds has shrunk", BMI Research said in a report.
The central bank has said the devaluation will help face "challenges from a noticeable decline in foreign currency inflows from tourism, direct investment and remittances from Egyptians living overseas". Tourism, a cornerstone of the Egyptian economy and a key foreign exchange earner, has been severely hit by political turmoil since the fall of long-time leader Hosni Mubarak in 2011.
It was dealt another body blow by the crash of a Russian airliner in the Sinai Peninsula on October 31 that killed all 224 people on board, mostly Russian tourists.
The Islamic State jihadist group said it planted a bomb on board. Revenues from tourism slumped 15 percent to $6.1 billion in 2015.
Egypt's foreign exchange reserves have fallen from more than $36 billion in 2010 to about $16 billion, despite roughly $20 billion given in aid to Cairo by its powerful Gulf allies.
The central bank said on Monday that the reserves would reach $25 billion by the end of 2016 on the back of "foreign investments and an increase in the competitiveness of the Egyptian economy".
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