Egypt's central bank kept the pound stable at 8.78 per dollar at its regular foreign currency auction on Tuesday, its first since cutting the number of auctions to once a week from three, but the pound weakened on the black market as demand exceeds supply. The central bank sold $104.5 million at the auction after offering $120 million earlier on Tuesday, data from the central bank showed.
Egypt, which relies heavily on imports, has been facing a dollar shortage since a popular uprising in 2011 drove away tourists and foreign investors, both major sources of hard currency. On Sunday the central bank said it would consolidate its foreign currency auctions that were previously held three times a week into one auction to be held on Tuesday, bringing the amounts sold during Tuesday's auction to $120 million.
The central bank had devalued the pound to 8.85 per dollar from 7.73 on March 14 and announced it would pursue a more flexible exchange rate. It later strengthened the pound to 8.78 per dollar. On the black market, sources said they would sell dollars at a range between 9.68-9.70 pounds on Tuesday, without specifying volumes of trade. The rate differs from Sunday's range of 9.50-9.55 per dollar.