Egyptian pound drops near 17 against U.S. dollar

CAIRO, Nov 7 (Reuters) - The Egyptian pound dropped near 17 to the U.S. dollar in early interbank dealings on Monday as trading volumes started to pick up after the currency was floated at the end of last week, traders said.

The pound was quoted at 16.80-17.20 to the dollar, but rates were volatile and spreads wide. On Sunday, the pound dropped to around 16 from 15.50; interbank trading volumes were very small because banks were still uncertain about supply and demand.

“The problem is that anyone who speculated last week bought dollars at high rates, and so far, current rates do not cover the cost of purchase for most of them,” said one banker. “The rate will need to hit 18 Egyptian pounds to the dollar or so before they off-load, if they do.”

Last Thursday, the central bank abandoned the pound’s peg of 8.8 to the dollar in an effort to attract inflows of capital and close down a booming black market in dollars. (Reporting by Andrew Torchia; Additional reporting by Ahmed Aboulenein; Editing by Toby Chopra)