June 11, 2014 / 10:51 AM / 4 years ago

UPDATE 1-Gap between Egypt pound's official and unofficial rates widens

(Updates black market price in para 2)

CAIRO, June 11 (Reuters) - The gap between the Egyptian pound’s official and unofficial exchange rates widened on Wednesday, with the pound slipping against the dollar in the black market and remaining stable at a central bank dollar sale.

The dollar was offered for 7.40 pounds in the black market on Wednesday afternoon, having earlier changed hands at a rate of 7.35/37. That was weaker than on Tuesday, when the dollar was offered for around 7.25 pounds in the morning and 7.32 pounds in the evening.

The pound had strengthened in the black market after the election victory last month of former army chief Abdel Fattah al-Sisi, who was sworn in as president on Sunday.

Traders had predicted a temporary appreciation in the parallel market following the election, citing hopes of new investment and aid from Gulf Arab countries which have already given billions in aid to help stave off an economic collapse. The pound had traded at around 7.50 pounds to the dollar before the elections.

The central bank said it had sold $37.6 million at a cut-off price of 7.1402 pounds on Wednesday, unchanged from its last sale on Monday. It had offered $40 million.

Forex traders and economists have described the central bank’s decision to allow the pound to gradually weaken since March as a managed depreciation. The central bank has not said why it has been letting the currency weaken.

Business leaders have cited clarity on the direction of the currency as a condition for further investment.

The rates at which banks are allowed to trade dollars are determined by the results of the central bank sales, giving the bank effective control over official exchange rates. (Reporting by Shadia Nasralla and Stephen Kalin; Editing by Catherine Evans)

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