Egypt's black market battle: CBE auctions another $1.5M

On Tuesday, the CBE sold $200m to banks operating in the local market at rate of EGP 8.85 per dollar, through an exceptional tender, to cover the demand of food commodities importers.

Tuesday’s auction was the second consecutive day in which the CBE issued an exceptional tender to inject foreign currency liquidity into banks, as it sold a similar sum on Monday.

Director General of Treasury at the Industrial Development and Workers Bank of Egypt (IDBE) Haitham Abdel-Fattah said the two exceptional dollar tenders indicate that the CBE wants to send a clear message to the market that it is determined to restore balance to the banking sector. It also affirms that the central bank aims to eliminate the informal market.

Abdel-Fattah told Daily News Egypt that dealers on the informal market tried to raise the dollar price above EGP 8.95 on Monday and Tuesday. However, these traders failed to sell their holdings at this price and suffered heavy losses, as many had bought dollars at a higher price.

Abdel Fattah claimed that the informal market will vanish within days, as the CBE has been boosting its efforts to eliminate it.

Mohamed Al-Abyad, head of the general division for exchange companies in the Federation of Egyptian Chambers of Commerce (FEDCOC), said the informal market is confused after the CBE’s decision to increase the value of the US dollar in the formal market to EGP 8.95 on Monday.

He told Daily News Egypt that foreign currency trading completely halted in the informal market on Monday and Tuesday.