Dollar price drops on black market as talks on $12bn IMF loan announced

The price of the US dollar has fallen against the Egyptian pound on the black market after the official announcement of negotiations between Egypt and the IMF regarding a US$12 billion loan package.

Two days ago, one dollar was worth LE13 or LE13.25 on the black market, but on Thursday it dropped to between LE12.50 and LE12.60.

Traders in Egypt's currency black market have said that after such a drop, currency exchange offices and their corresponding markets will stop operations until they see what new decisions the Central Bank of Egypt will take.

Some traders are anticipating another tender offer for about $500m, to help out with the needs of investors who have been stuck in limbo in Egypt so far, or else a devaluation of the Egyptian pound, to coincide with the visit from the IMF delegation.

With dollars now fetching a lower price on the black market than was offered recently, many people will be hesitant to sell their dollars for the time being, meaning a drop in availability.

Meanwhile, the official price of the dollar has been fixed officially at LE8.88, amid demands made on the part of importers for more foreign currency in the country. If people don’t sell at a higher price, they won’t sell, which means demands go unanswered.

The CBE put out bonds for about $120 million to other local banks yesterday, $116 million of which have already been sold, all at a fixed price of LE8.78.

Mohamed al-Etreby, head of the CBE, has praised the way that the Egyptian government and the CBE are dealing with the dollar shortage.

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