CAIRO, Mar 14 (Aswat Masriya) – Egypt's central bank said on Monday it had undertaken a "more flexible" exchange rate policy with the aim of "restoring regular and sustainable foreign exchange trading within the banking system."
The Central Bank of Egypt (CBE) devalued the Egyptian pound on Monday to change hands at EGP 8.85 per dollar down from EGP 7.73, marking the first devaluation since last November.
CBE offered $200 million at the new exchange rate of 8.85 Egyptian pounds, in an exceptional auction on Monday. The bank sold $198.1 million to cover the prices of the basic commodities.
Egyptian banks devalued the Egyptian pounds to change hands at EGP 8.95 to the dollar. The CBE allows banks to sell dollars at 10 piastres below or above the original value.
On the black market, the Egyptian pound strengthened against the dollar, buying at EGP 8.84 and selling at around EGP 9, after it had weakened last week, almost reaching EGP 10 to the dollar, Reuters reported.
To alleviate the crisis, the CBE injected $500 million into banks in an exceptional auction last Sunday to cover the imports of basic commodities. It also lifted the cap on foreign currency cash deposits and withdrawals for individuals and for companies that import basic commodities.
Egypt's foreign reserves inched up at the end of February by 56 million dollars reaching 16.533 billion, still less than half of the foreign reserves Egypt had before the 2011 Uprising when they were almost $36 billion.