Egypt's central bank said it would hold an exceptional auction on Sunday for $500 million to cover imports of strategic goods, pumping more foreign exchange into an economy that has been starved of dollars.

Egypt, which relies heavily on imports, hasn't been able to recover since a popular uprising in 2011 toppled autocrat Hosni Mubarak, driving tourists and foreign investors away - major sources of hard currency.

The central bank has been keeping the pound at 7.7301 per dollar, but the currency has been depreciating rapidly on the black market over the past week. It reached 9.50 to the dollar on the black market on Thursday.

"If the central bank sold dollars at a different price than the regular auctions it will be a good surprise and could result in a decline of prices in the parallel market even if the crisis is not resolved," said Hany Genena, head of equities at Beltone Financial.

The central bank normally sells no more than $40 million at its regular forex auctions, which are held three times a week.

The exceptional auction would be held at 3 p.m. (1300 GMT), the central bank said in an announcement to traders. A central bank official later told Reuters the purpose of the auction was to cover imports of strategic goods.

Egypt's reserves have dropped from $36 billion in 2011 to $16.53 billion at the end of February.

A year ago, the central bank imposed strict controls on hard currency movements. These were eased this year but the currency shortage has made it harder for companies to operate and forced many to resort to the black market for their dollar needs.

"If a devaluation in the pound happens at today's exceptional auction then this will be a message for foreign investors that it is a beginning of the floatation of the exchange rate to restore the balance in the rate with the parallel market," Genena said.

Egypt is targeting between $8-10 billion in foreign direct investment this year. – Reuters