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UPDATE 1-Egypt pound weakens at dollar sale, on black mkt
April 9, 2014 / 11:02 AM / 4 years ago

UPDATE 1-Egypt pound weakens at dollar sale, on black mkt

(Adds trader comment, details)

CAIRO, April 9 (Reuters) - The Egyptian pound weakened at a central bank dollar auction and on the black market on Wednesday, with some traders pointing to stock market investors booking profits after a good run.

The central bank sold dollars at a cut-off price of 6.9652 pounds, leaving the pound weaker than at its last auction on Monday when the rate was 6.9649 pounds.

The rates banks are allowed to trade dollars at is determined by set ranges around the results of the regular central bank dollar sales, giving the central bank effective control over rates in the official market.

Banks sold the dollar for 6.9751 pounds on Wednesday. The currency last Thursday had hit its weakest rate since September at 6.9751.

The dollar on the black market was sold for 7.49 pounds on Wednesday compared with 7.45 pounds on Monday, according to market participants. One Cairo-based forex trader said the dollar was sold at 7.52 pounds on Tuesday evening. Another trader said the rate was 7.48 pounds.

“There’s huge (dollar) demand (in the black market). Most probably from corporates and Arab investors exiting the stock exchange,” one Cairo-based forex trader said.

Egypt’s main index this week dropped to its lowest close since Feb. 11. The benchmark has fallen around 14 percent from March 26’s five-year closing high.

The sell-off came after former army chief Abdel Fattah al-Sisi said he would run for president; investors, most of whom favour Sisi, had bid up the market ahead of the announcement and took profits afterwards.

It had been trading in a loose range around 7.30-7.40 for the last two months.

The central bank sold $38.3 million at its dollar sale on Wednesday. It had offered $40 million.

Egypt’s foreign currency reserves stood at $17.414 billion in March. This compares with $17.307 billion 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)

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