Vendor on the streets of Cairo, Egypt with an enlarged US dollar advertisement in the background. Egypt is facing a renewed economic crisis due to its alliance with imperialism., a photo by Pan-African News Wire File Photos on Flickr.
Egypt pound falls to 6.36 to US dollar
Ahram Online, Sunday 30 Dec 2012
New currency regime aimed at conserving reserves sees Egyptian pound fall to an eight year low Sunday afternoon
The Egyptian pound plummeted to an eight year low against the US dollar on Sunday afternoon, following a currency auction in which the Central Bank sold $75 million to local banks.
The dollar is currently priced to customers at LE6.365 plus a 2 per cent administrative fee, one banker told Ahram Online, Sunday.
At a maiden foreign currency auction on Sunday morning, the Central Bank sold US dollars to banks at a cut-off price of LE6.2425.
The Central Bank of Egypt (CBE) had announced earlier on Sunday several procedures to preempt a looming foreign currency crisis, including putting a limit on corporate cash withdrawals at $30,000 per day, Reuters reported.
It also placed a two per cent administrative fee on individuals who purchase foreign currencies.
"The new fee is curbing the demand on the US dollar a little bit, but a lot of people are coming to buy it at any price," a bank manager in downtown Cairo said.
The local currency is currently trading at a price between LE6.32 to LE6.38 in banks and currency exchange shops. The previous low for the pound, in October 2004, was about 6.26 to the dollar.
Egypt's currency market has been prey to uncertainty since a $4.8 billion loan with the International Monetary Fund (IMF) was postponed earlier in December. Rumors about a looming crisis and possibilities of Egypt 'going bankrupt' have prompted individuals to rush to exchange offices to buy up the hard currency.
The frenzy is augmented by the fact that Egypt's net international reserves, which have helped keep the exchange market stable since January 2011, currently stand at $15.03 billion.
The CBE said on Saturday it was introducing the new exchange regime to conserve foreign reserves, which it said had fallen to a critically low level.
The new regulations also put a limit on the amount of US dollars banks can hold. Under the new rules, Egyptians banks are not allowed to hold long positions in US dollars of more than one per cent of their capital.
EFG-Hermes, the largest investment bank in Egypt and the Middle East, published a report on 19 December expecting the pound to drop by the end of 2013 and reach 6.6 to the dollar.
http://english.ahram.org.eg/News/61524.aspx
Egypt Central Bank announces new procedures on foreign currency
Reuters and Ahram Online, Sunday 30 Dec 2012
Egypt's Central Bank places a $30,000 daily foreign-currency withdrawal cap on corporates, charges extra fees on currency exchange for individuals
The Central Bank of Egypt (CBE) announced on Sunday several procedures to preempt a looming foreign currency crisis, including putting a limit on corporate cash withdrawals at $30,000 per day, Reuters reported.
The new regulations also put a limit on the amount of US dollars banks can hold. Under the new rules, Egyptians banks are not allowed to hold long positions in US dollars of more than one per cent of their capital.
The Central Bank will place a one to two per cent administrative fee on individuals who purchase foreign currencies.
The CBE is offering $75 million at its first foreign currency auction on Sunday, with a maximum $11 million per bank.
The auction is part of a new currency regime the bank announced on Saturday to conserve its foreign reserves, which it said have fallen to a critical level.
http://english.ahram.org.eg/News/61507.aspx
Egypt gov't launches 'economic development' initiative
Ahram Online, Sunday 30 Dec 2012
Prime Minister Hisham Qandil sets economic goals, invites societal and opposition figures to an 'economic development dialogue'
An initiative aimed at tackling Egypt's key economic challenges and promoting dialogue between all societal factions and political forces is to be launched in a series of "societal dialogues," announced Prime Minister Hisham Qandil at a press conference Sunday.
"Our top economic priorities today are to achieve social justice, fight rising unemployment, end corruption, promote investments and revive the tourism sector," said Ashraf El-Arabi, minister of economic cooperation.
Overcoming economic challenges will only happen if society as a whole takes a unified stand and addresses the same economic concerns: this is the goal of the initiative, said Qandil.
"The initiative is not solely addressed at economic experts and academic research centres. We invite the opposition to an open dialogue on the country's economy, and we believe in their patriotic intentions and good faith," Qandil stated.
Qandil underlined that the economy's structural problems need to be addressed with swift reforms that sometimes can be perceived as harsh and burdensome on citizens, but are nonetheless prerequisites to fight chronic deficiencies such as the budget deficit.
The "economic development" initiative comes in light of President Morsi's speech Saturday before the newly reconstituted upper house of parliament, the Shura Council, where he announced that the government would set up a new state body, the Council on Economic Development. The new body would be tasked with restarting Egypt's economy, reaching higher growth rates and curbing public debt.
http://english.ahram.org.eg/News/61514.aspx
Egypt to resume talks with IMF in January, currency will not be floated: PM
Ahram Online, Sunday 30 Dec 2012
January will see new talks with the IMF over a $4.8 billion loan, says Prime Minister Hisham Qandil
Egyptian Prime Minister Hisham Qandil announced Sunday that talks with the International Monetary Fund will be resumed in January over the $4.8 billion loan, which was suspended due to political tensions that followed the presidential constitutional decree in November.
Qandil was speaking at a Cabinet press conference, denying rumours about the devaluation of the Egyptian pound, especially after it reached its lowest value, recording 6.36 to the US dollar.
"The Central Bank of Egypt can handle the monetary policy of the state and it will never allow the local currency to be floated," Qandil commented.
Speaking on recent tax hikes that were immediately rescinded, the prime minister assured, “The new taxes will not touch vital and basic commodities such as fuel and bread. I want to reassure Egyptians that there is no governmental intention to increase fuel prices in the coming period.”
The prime minister stated that 5.2 million households received natural gas between 1982 (when natural has was first introduced domestically) until 2012. The government plans to deliver natural gas to a further 750,000 households by the end of 2013 in order to reach two million units by July 2014.
Natural gas is the alternative to butane cylinders, which saw several shortages over the last year. According to Qandil, natural gas pipelines will save Egypt roughly LE1.2 billion ($19 million).
Turning to political matters,Qandil refused to give details on an awaited ministerial shuffle.
http://english.ahram.org.eg/News/61521.aspx
Egypt starts currency auctions to boost foreign reserve levels
Reuters and Ahram Online
Saturday 29 Dec 2012
Egypt's Central Bank announced Saturday it would implement currency auctions as reserves reach critical levels
Egypt's Central Bank has introduced a new auction system for buying and selling US dollars to help conserve foreign reserves, which it says have reached a critical level.
Political turmoil over the last month has prompted a rush by investors and ordinary citizens to switch their Egyptian pounds into foreign currency on concerns that the government might devalue the pound or bring in capital controls.
The Central Bank has spent more than $20 billion in foreign reserves to support the pound since a popular uprising toppled Hosni Mubarak in early 2011. Political turmoil has chased away tourists and foreign investors since.
Reserves fell by $448 million in November to $15.04 billion, enough to cover only three months of imports, and bankers said the rush to buy dollars was certain to have drained foreign reserves even further in December. The Central Bank is expected to report December figures in the first week of January.
"The current level of foreign currency reserves represents the minimum and critical limit," the Central Bank said on its website Saturday.
"This requires their being conserved for critical uses, as represented in fulfilling foreign debt obligations to preserve Egypt's reputation in international financial markets, and to cover imports of strategic commodities," it added.
The new system will take effect Sunday, 30 December, and run alongside and not affect the current interbank currency market, the Central Bank said.
It added the auctions would be held regularly and that banks would be asked to submit bids, but gave few other details.
Egypt said it would continue to meet instalments and interest payments on its foreign debt and allow transfers by foreigners who had invested on the stock exchange.
The Central Bank said the banking system's finances remained "strong and secure," but called on Egyptians to "rationalise their use" of foreign currency and not to speculate.
http://english.ahram.org.eg/News/61491.aspx
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