Egyptian pound stable at Tuesday's auction, weaker on black market

CAIRO, May 3 (Reuters) - The Egyptian pound was stable at a central bank auction on Tuesday but weakened on the black market.

The central bank sold $119.6 million a 8.78 per dollar, far from the black market rate of around 11.05 per dollar that two traders quoted on Tuesday. They did not give volumes of trade.

Last week, traders on the black market quoted 10.40/10.50 to the dollar.

The United Arab Emirates has allocated $4 billion to Egypt, half of it in investment and half as a central bank deposit to support cash reserves, the UAE state news agency WAM reported last month.

Egypt, which relies heavily on imports, has been facing a dollar shortage since the popular uprising in 2011 drove away tourists and foreign investors, major sources of hard currency.

In an attempt to close the gap between official and black market rates, the central bank devalued to 8.85 per dollar from 7.7301 in March, while announcing a more flexible exchange rate policy. It later strengthened the pound to 8.78 per dollar, where it has remained since.

The central bank has sought to crack down on black market trading, meeting with bureaus to push them to sell closer to the official rate and revoking some licences over the issue.

Egypt’s public prosecutor is investigating several bureaus accused by the central bank of hoarding dollars, judicial sources have said. (Reporting by Asma Alsharif Editing by Jeremy Gaunt)