Egypt central bank meets exchange bureaus

Egypt's central bank has begun holding meetings with foreign exchange bureaus to try to keep a lid on black market rates for the dollar, black market traders said, in a move one banker said was doomed to fail.

Egypt, which relies heavily on imports, has been facing a shortage of foreign currency since a 2011 uprising drove away tourists and investors, two major sources of hard currency.

But the central bank has resisted devaluing the pound, keeping it artificially strong at 7.7301 to the dollar. The black market rate has weakened, however, hovering around 8.70 pounds in the last week.

Officially the central bank allows exchange bureaus to sell dollars at up to 15 piasters either side of its set price, but the bureaus have been known to demand more for the greenback when it is in short supply.

The country's foreign reserves have tumbled to around $16.5 billion from about $36 billion before the 2011 revolt which overthrew Hosni Mubarak. That has put pressure on the exchange rate, which has weakened steadily from about 5.8 pounds per dollar five years ago.

Former central bank governor Hisham Ramez had fought the black market head on, talking publicly about crushing it and shutting down dozens of exchange bureaus selling at unofficial rates.

Tarek Amer, who took over from Ramez in November, is taking a different approach, trying to work with exchange bureaus to control the market, bankers and traders said.

"There was a meeting on Sunday between the central bank and the big exchanges. They agreed to bring the price of the dollar (on the black market) down to around 8.6 pounds," said a manager at one exchange bureau who was briefed on the meeting. He declined to be named.

"That was the first meeting and there will be other meetings every week with the central bank. The agreement was to bring the price down more."