Central Bank reduces currency auctions to once a week

Egypt’s Central Bank announced Sunday that it plans to reduce its regular currency auctions to once a week, down from three times a week previously.

The auctions will be held Tuesdays, the bank said in a Sunday statement, but did not specify how much currency would be made available.

The CBE introduced currency auctions in December 2012, as it attempted to defend Egypt’s foreign reserves while carrying out a managed devaluation of the pound. It uses these auctions to set the official exchange rate for dollars and to inject dollars into the banking system to supply importers and other businesses.

The dollars made available to businesses by commercial banks have been insufficient to meet demand. The shortage of dollars available through formal channels, combined with deposit restrictions that barred businesses from sourcing large amounts of dollars on the black market and depositing them in bank accounts, left many businesses suffering a severe currency shortage.

In recent weeks, the Central Bank has taken several measures to ease the situation for businesses. On March 9, it lifted dollar deposit restrictions for importers of essential commodities. On March 14, it devalued the pound, bringing the official rate closer to black market prices. The bank also made almost US$2 billion available through auctions last week.

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