CAIRO, June 7 The policies of Egypt's central
bank are succeeding in restoring stability to the foreign
exchange market and controlling inflation, bank governor Hisham
Ramez was quoted by state media on Saturday as saying.
The central bank has been letting the Egyptian pound weaken
in the official market, probably judging the economy has
stabilised enough for it to undertake this process without
triggering a run on the currency, though it has not publicly set
out its thinking.
Ramez was quoted by official newspaper Al-Akhbar Al-Youm as
saying the policies were "beginning to bear fruit as the market
is already experiencing a significant decline," in foreign
currencies against the pound.
He also said the policies would lead to the elimination of
the "parallel" or black market, which has thrived because of a
difference which opened up between official and unofficial
Rates at which banks are allowed to trade dollars are
determined by the results of central bank sales, giving the bank
effective control over official exchange rates.
Egypt has been suffering from a sustained dollar shortage as
political turmoil following the 2011 uprising against veteran
leader Hosni Mubarak unnerved foreign investors and tourists,
traditionally major sources of foreign currency.
The shortage opened a gap between the pound's official
market rate and the weaker rate at which it trades in illicit
money-changing shops and back alleys.
But the pound has strengthened markedly in the black market
since former army chief Abdel Fattah al-Sisi's victory in
presidential elections last month.
Black market dealers and bank economists say that the gap
between the two rates may vanish as early as the end of this
(Reporting by Ali Abdelati and Shadia Nasralla; Writing by
Maggie Fick; Editing by David Holmes)