February 2, 2015 / 11:07 AM / 3 years ago

UPDATE 1-Egyptian pound weakens to new low of 7.53 pounds per dollar

(Adds details, background, black market rate)

CAIRO, Feb 2 (Reuters) - Egypt’s pound sold for 7.53 per dollar at a central bank auction on Monday, the weakest level it has been allowed to reach since auctions began in December 2012.

The bank offered 40 million dollars and sold 38.4 million at a cut-off price of 7.5301 pounds per dollar, the central bank said. The pound sold for 7.51 at the previous sale.

The rates at which banks are allowed to trade dollars are determined by the results of central bank sales, giving the bank effective control over official exchange rates. There remains an active black market in the pound, though.

A trader on the unofficial market said the pound was changing hands at 7.92 per dollar on Monday, a jump from the rate of 7.82 that was quoted yesterday.

Egypt’s central bank last week gave banks permission to widen the band around the official rate at which they can trade dollars, to 10 piasters above or below the official rate from 3 piasters, in a bid to stamp out the black market.

Expectations that the bank will devalue the pound have grown since it announced a surprise 50-basis-point cut in benchmark interest rates this month. The bank said plummeting global oil prices had eased the inflation outlook. (Reporting by Shadi Bushra and Ehab Farouk; Editing by Larry King)

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