Egypt pound falls more against dollar on black market

CAIRO

The Egyptian pound has fallen further against the U.S. dollar, now trading at more than 16 pounds to the greenback, local forex traders said Wednesday.

Traders, who preferred anonymity due to security concerns, told Anadolu Agency that the dollar was now selling at a record high of 16.25 pounds on the parallel market -- by far the weakest rate in the country’s history.

There is now an "unusual demand" for dollars by both speculators and importers, they said.

"Few people, however, are selling their dollars right now," said one forex trader.

For one month, the Egyptian market has been waiting for the country’s central bank to officially devalue the local currency.

Currency devaluation is one of the conditions laid out by the IMF for a requested $12-billion loan to Egypt.

Nevertheless, the central bank on Tuesday kept the official exchange rate at 8.78 pounds to the dollar.

In an effort to rein in the black market, the Egyptian authorities have made it illegal to trade foreign currency at any rate other than the official one.

After decades of pegging the pound to the dollar at roughly 3.5, Egypt’s financial authorities in 2003 introduced a "managed float" policy, which saw the local currency gradually lose value against the greenback.

Following Egypt’s 2011 popular uprising, which ended the 30-year rule of autocratic President Hosni Mubarak, the pound tumbled to 5.8 to the dollar.

During the one-year rule of Mohamed Morsi, Egypt’s first democratically elected president (ousted in a 2013 military coup), the currency fell further to some 7 pounds to the dollar.

Since then, the Egyptian pound has lost more than 100 percent of its value due to an acute shortage of hard currency in the local market.

Experts attribute the shortage to a dramatic decline in tourism revenue, foreign investment and exports in recent years, due primarily to the country’s ongoing political turmoil.