Egypt's pound weakened against the US dollar yesterday, as street violence and deaths added to the political crisis, extending a steady decline at the central bank's foreign exchange auctions since their launch last month.
One analyst said trading was cautious but not panicked after a weekend of flare-ups across Egypt that killed at least 41 people. Repeated eruptions of violence have weighed heavily on the pound, which has been hitting fresh lows against the dollar.
At 6.500 to the dollar, the pound has lost about 7 per cent of its value since the auctions began at the end of last month. It is about 12.5 per cent weaker than before the uprising that ousted Hosni Mubarak in 2011.
At the latest auction yesterday, the central bank said it had accepted bids worth $48.1 million with a cut-off price of 6.6235 Egyptian pounds to the dollar.
"There is an overall sense of caution as the market absorbs the current developments on the street, but no panic or overreaction," said Youssef Kamel, a fixed income analyst at the financial firm Rasmala.
Egypt's economy, battered by two years of political and street turmoil, has been helped by injections of cash from the Arabian Gulf and other donors. But delays in securing a $4.8 billion IMF loan have worried investors. On the interbank market, the pound weakened to 6.500, around the maximum allowed under central bank rules that let the currency move in a band of 0.5 per cent either side of the weighted average of bids at the most recent auction.
The auctions were launched in a bid to preserve Egypt's foreign reserves, which have fallen to a critical level of about $15bn, covering about three months of imports.
The bank usually holds three foreign currency auctions a week. The last auction was on Tuesday of last week, however, because Thursday, when it usually holds its third weekly auction, was a holiday.
Yesterday's auction was the 14th such sale.