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Egypt pound drops as Friday protests loom

Cairo, August 29, 2013

The Egyptian pound weakened on the black market ahead of planned Friday protests in support of ousted President Mohamed Mursi, hurt by fears of more deadly clashes with police, traders said.

But the pound strengthened marginally at a central bank foreign currency sale.

Mursi's supporters have called for mass protests after Friday prayers. The dispersal by security forces of pro-Mursi sit-ins two weeks ago triggered clashes that left more than 900 dead, but a call for protests last Friday failed to attract many people.

"The market today is very volatile because of the panic from Friday riots," said a currency trader at a Cairo bank.

Black market dealers were offering to buy dollars for about 7.14 Egyptian pounds on Thursday and sell them for 7.18 pounds, compared with rates of 7.10 and 7.14 pounds on Wednesday, one currency trader said. Another quoted 7.16/19.

The pound weakened on the black market early this year to as low as 8.05 per dollar as the country drained its foreign reserves to support it. Egypt's reserves were already low after a plunge in foreign investment and tourism due to turmoil since in the wake of the country's popular uprising in early 2011.

The black market has shrunk since the army deposed Mursi on July 3 and the subsequent arrival of $5 billion of aid from Gulf Arab states to top up Egypt's foreign reserves, giving the central bank more ammunition to support the official price.

The central bank sold $38.6 million and the cut-off price was 6.9757 Egyptian pounds per dollar versus 6.9760 at a sale on Thursday, the bank said. The bank had offered $40 million.

The central bank introduced currency sales, held three times a week, at the end of December to help to stave off a currency crisis and thwart a run on the pound.

Since Mursi was ousted, the central bank has allowed its official cut-off price to appreciate gradually from a low of 7.0184 on July 3. – Reuters




Tags: Egypt | Pound | black market | Mursi |

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