CAIRO, Oct 18 (Aswat Masriya) - Egypt's central bank depreciated the Egyptian pound by 10 piasters allowing it to drop from 7.83 to 7.93 Egyptian pounds to the dollar on Sunday, in the second depreciation within one week, taking the currency's decline to the year to 11 percent. 

The bank offered $40 million in a foreign exchange auction, state news agency MENA reported, but the bank has not yet announced the results of the auction. 

Commercial banks are now selling the dollar for 8.03 Egyptian pounds. Banks are allowed to trade the dollar at 10 piasters higher or lower than the auction price, while exchange shops can add another 5 piasters. 

Meanwhile, the dollar has jumped to 8.40 Egyptian pounds at the black market which has resurfaced despite measures taken earlier this year to crackdown on it, an official at a currency exchange shop told MENA.

The Financial Times said last week that the pound is the "most overvalued currency with a current account deficit in emerging markets." 

A decline in foreign reserves, which tumbled to $16.335 billion by the end of September, has placed pressures on Egypt's central bank and investment banks had projected that the dollar will be selling for 8 Egyptian pounds by the end of the year. 

An analysis by investment bank Renaissance Capital cited by the Financial Times projected that Egypt's pound will depreciate 20 percent in the next two years. 

Egypt's central bank has already depreciated the pound several times this year.

In the previous auction on Thursday, the bank depreciated the pound by 10 piasters, allowing it to drop from 7.73 to 7.83 pounds to the dollar.  

In July, the bank also depreciated the Egyptian pound twice, allowing it to dip by 20 piasters, falling from 7.53 to its previous price of 7.73 against the dollar.

On January 18, Egypt allowed the pound to weaken in front of the U.S. dollar for the first time in six months.

Egypt said the step was taken to eliminate the unofficial currency market, known as the black market. In a second blow to the parallel market, the central bank capped on February 5 the amount of dollars that can be deposited in banks.

The central bank holds three foreign exchange auctions every week.