US dollar exchange rate declines slightly

The US dollar exchange rate declined slightly in banks on Wednesday; the lowest rate found in banks was LE18.15 to the dollar in the National Bank of Egypt (NBE).

The NBE's website shows it sold US dollars at LE18.15 this morning, while buying at LE18.10, compared to Tuesday's prices which were LE18.25 for selling and LE18.20 for buying.

Banque Misr is selling US dollars at LE18.17, and buying at LE18.12; Banque du Caire is selling US dollars at LE18.27, and buying at LE18.20.

The Arab African International Bank (AAIB) is selling US dollars at LE18.28, and buying at LE18.18, compared to Tuesday's prices of LE18.41 for selling, and LE18.27 for buying.

Egypt floated the national currency on November 3. It devalued the Egyptian pound by about a third from the former peg of LE8.8 against the dollar and allowed it to drift lower.

Egypt's dollar peg had drained the central bank's foreign reserves, which were hit by reduced foreign investment following political turmoil in the past few years, forcing the central bank to impose capital controls and ration dollars.

The US dollar scarcity then prompted desperate importers to turn to a burgeoning black market, where the dollar at one point fetched more than twice its official value.

A severe shortage of dollar liquidity when markets opened for the first time after the flotation resulted in low volumes and the pound weakening to LE18 to the dollar.

Since the flotation, more companies have gone to the banks for their dollars, leaving them scrambling for funds, while a lack of liquidity means interbank trading got off to a slow start.

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