Egypt pound weakens as dollar demand picks up

Monday 06-03-2017 04:52 PM

A man counts U.S dollars and Euros at a money changer office in central Cairo, Egypt, December 27, 2016. REUTERS/Mohamed Abd El Ghany

By Reuters

The Egyptian pound weakened further on Monday as dollar demand from importers rose ahead of the Muslim holy month of Ramadan, when food consumption usually increases.

Ramadan, Islam's holy month during which believers abstain from eating and drinking during daylight hours, is set to start in May this year and often sees Egyptian families stock up on various food items and other goods.

Banks were selling the U.S. dollar for between 16.9-16.85 pounds, weaker than the 16.1-16.2 per dollar rates they were selling at last week.

"Now is the time for importers to make the orders for Ramadan so demand has risen over the past two weeks," said one Cairo-based banker, adding that demand for dollars began piling up again at banks.

Egypt's central bank abandoned its currency peg of 8.8 pounds to the U.S. dollar on Nov. 3, hoping to unlock currency inflows and bring back foreign investors who were driven away after the 2011 uprising that ousted Hosni Mubarak.

The float more than halved the pound's value to nearly 20 pounds to the dollar by December. It has since rallied, however, dipping below 16 per dollar in February on the back of lower dollar demand for imports.

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