Egyptian pound plunges in black market rush for dollars

The Egyptian pound has continued its sharp decline, with exchange rates on the black market reaching between 10.15 and 10.20 against the US dollar on Wednesday. There is strong demand for converting the pound into the US currency.

The Central Bank of Egypt (CBE) lowered the value of the pound to 8.85 per dollar from 7.73 on 14 March, announcing that it will adopt a more flexible exchange rate policy. The bank raised the price shortly afterwards to 8.78 pounds per dollar, but experts say that the Egyptian currency’s value is still inflated.

The steps taken by the CBE, including reducing the local currency, exceptional bids or closing exchange bureaus, have not succeeded in eliminating the black market in US dollars, or even mitigating the decline in the pound. During February and March, the bank closed five currency exchange bureaus for manipulating prices.

Seven traders said that they have sold currency at a rate of $1 = 10.20 pounds, while four others said that they have sold it at between 10.15 and 10.18 pounds. The Egyptian pound fell on Tuesday on the black market to an average of 10.10 pounds per dollar amid rumours that the central bank would decrease its value yet again at a dollar auction held on Tuesday, which did not happen.

The CBE officially allows exchange bureaus to sell the dollar by 15 piasters above or below the official price. However, it is known that the bureaus are asking for a higher price for the dollar when it is in short supply.