February 6, 2013 / 9:57 AM / 5 years ago

Signs of resilience from Egyptian pound after central bank action

CAIRO (Reuters) - Egypt’s central bank sold fewer dollars to banks on Wednesday than in a previous auction and the pound gained for the second time in three days as authorities battle to halt a slide of its currency into crisis.

The central bank imposed a new tighter trading band for the pound on Monday and it also surprised traders on Wednesday by announcing an extra auction on Thursday - both possible reasons for a rise in the pound on the interbank market after the sale.

By 6.23 a.m. EST, the pound had risen to trade at 6.690 to the dollar compared to 6.70 just before the result was announced.

“Thursday’s action was a surprise, a nice one,” one trader told Reuters.

It has still lost around 8 percent since the bank changed its currency regime in December to avoid an outright currency crisis and figures on Tuesday showed Egypt’s reserves of dollars and other hard currency have more than halved to less than $15 billion in that period.

The bank had said it would hold auctions on Monday and Wednesday this week in a statement widely taken to mean that it would cut the frequency of auctions to two per week from three.

In a brief statement, the central bank did not say how much it would offer at the second sale. This week’s changes coincide with arrival in office of new central bank governor Hisham Ramez.

The bank sold $49.6 million in what was its 18th sale of dollars since December on Wednesday. The cut-off price of 6.7020 Egyptian pounds to the U.S. dollar, compared to 6.6920 at the previous auction on Monday.

The central bank offered $75 million at Monday’s auction, accepting bids for $73.1 million.

Reporting by Tom Perry, Asma Alsharif; editing by Patrick Graham

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