CAIRO: The Egyptian pound strengthened on the black market yesterday as fears the country might be sliding into a period of sustained violence eased after a protest on Friday passed relatively peacefully, traders said.
The pound had dropped late last week ahead of mass demonstrations called for Friday to protest against the dispersal by security forces of a sit-in on August 14 of supporters of deposed President Mohamed Mursi.
“It was only the panic there might be Friday riots. Once they finished peacefully everything went back to normal,” said a forex trader at a Cairo-based bank.
The dispersal of the sit-in and the riots it triggered left more than 900 people dead, prompting nervous companies to switch into dollars.
The official price of the pound weakened at a central bank currency sale on Thursday.
Yesterday, black market dealers were offering to buy dollars for about 7.15 Egyptian pounds and sell them for 7.20 pounds compared to 7.20 and 7.25 pounds on Thursday, currency traders said.
The pound had weakened on the black market to as low as 8.05 per dollar early this year as the country drained foreign reserves — already low following a plunge in foreign investment and tourism due to turmoil since the country’s popular uprising in early 2011 - to support the currency.
Black market trading volumes, however, shrivelled after the army deposed Islamist President Mohamed Mursi on July 3 and the subsequent arrival of $5bn of aid from Gulf Arab states to top up the country’s reserves.
Much of the black market activity is conducted in the back offices of licensed exchange shops.
The $5bn in Gulf aid has helped the central bank to support the pound and the pound’s official price, controlled by the central bank, has been appreciating slowly since Mursi’s overthrow.
Traders say the central bank is ensuring the pound strengthens to give the impression the economy is stable and improving despite the turmoil.
The central bank sold $37.6 million and the cut-off price was 6.9764 Egyptian pounds per dollar versus 6.9768 at a sale on Thursday, the central bank said. The cut-off price on July 3 was 7.0184.
Reuters
