(Refiles to clarify Wednesday reference in 8th paragraph)
CAIRO, April 3 The Egyptian pound hit its
weakest rate in six months on Thursday and the central bank
allowed it to fall for the fourth time in five auctions, while a
persistent dollar shortage is keeping prices in the black market
high above official rates.
The rates banks are allowed to trade dollars at is
determined by set ranges around the results of regular central
bank dollar sales, giving the central bank effective
control over rates in the official market.
"We need to see bigger and much more prolonged movement in
the pound before we can say the central bank is loosening its
grip on the currency," said William Jackson, London-based
emerging markets economist at Capital Economics.
"We still think the pound needs to fall in order to regain
external competitiveness, but the financial support from the
Gulf has eased strains on the balance of payments meaning the
central bank was able to keep the pound stable."
Saudi Arabia, Kuwait and the United Arab Emirates have
showered Egypt with billions of dollars in aid since the army
deposed Islamist President Mohamed Mursi last July following
mass protests against him.
Banks sold dollars for 6.9750 pounds on Thursday, the
weakest rate since last September, while the pound fell in four
out of five central bank auctions since last week.
The dollar was sold for 7.43 pounds in the black market on
Thursday. It has been trading in a loose range around 7.30-7.40
for the last two months.
The central bank sold dollars at a cut-off price of 6.9651
pounds at its auction on Thursday, weaker than the 6.9525 pounds
on Wednesday of last week when it allowed the pound to weaken
for the first time since Jan. 8.
"If we see it in five, six auctions or if the pace continues
with larger moves, at that point of time we can start thinking
of a gradual allowing of depreciation," said a Cairo-based forex
The central bank sold $38.3 million at its dollar sale on
Thursday. It had offered $40 million.
Egypt's foreign currency reserves stood at about $17.42
billion pounds in March, central bank governor Hisham Ramez said
on Tuesday. This compares with $17.307 in February and $36
billion before the uprising that led to the ouster President
Hosni Mubarak in 2011.
(Reporting By Shadia Nasralla; Editing by Toby Chopra)