(Adds official announcement)
CAIRO Oct 4 Egypt's central bank kept the
Egyptian pound steady against the dollar at Tuesday's weekly
auction of foreign currency, confounding expectations of a
devaluation that had helped fuel a stock market surge.
The central bank said it sold $117.9 million at the weekly
sale, with the cut off price stable at the official rate of 8.78
pounds per dollar.
Speculation is rife that the bank could devalue the pound
any day to close the gap with the black market rate, which two
traders said had weakened to unprecedented levels of 14.20-14.25
to the dollar on Tuesday. They did not give volumes.
Those expectations were compounded on Monday by news that
the country's net foreign reserves jumped to $19.59 billion at
the end of September, their highest in over a year. The central
bank governor has said he would consider letting the pound float
freely if reserves exceed $25 billion.
It currently keeps the currency in a tight trading band
against the dollar.
Egypt had roughly $36 billion in reserves before a 2011
uprising that ushered in a period of turmoil, scaring off
tourists and foreign investors, key sources of hard currency.
The acute hard currency shortage has hit business and
discouraged investment in the past two years as companies
struggle to pay for imports and repatriate profit.
The central bank has not explained the rise in reserves, but
Egypt last month received the first $1 billion tranche of a $3
billion World Bank loan aimed at supporting the government's
The United Arab Emirates also agreed in August to give
Egypt's central bank a $1 billion deposit for six years, while
the government had been in talks with Saudi Arabia to secure a
new deposit worth $2 billion-$3 billion. It is also in talks
Devaluation fever had soared in recent days, with the
finance minister and other officials in Washington to make a
final push to seal a $12 billion three-year lending facility
deal with the International Monetary Fund.
(Reporting by Ehab Farouk, Lin Noueihed and Ola Noureldin;
Editing by Eric Knecht and Hugh Lawson)