Egypt cbank intervenes to prop up pound
Cairo, February 8, 2011
The central bank said on Tuesday it intervened in the market to prop up the Egyptian pound, helping the local currency rise against the dollar for the first time since political unrest gripped the country.
The currency had tumbled steadily since the eruption of political protests on Jan. 25. The market, however, was closed all of last week and only reopened on Sunday.
The pound traded as high as 5.87 to the dollar on Tuesday, up from its 5.952 close on Monday.
"We intervened in the market," the bank's Deputy Governor Hisham Ramez said by telephone, declining to specify the amount.
Traders said the central bank seemed to be trying to restore confidence before stock market reopens next week. The fate of the pound could play a big role in determining the extent shares are hurt by the crisis.
"It is a brutal intervention," said a trader at a bank in Cairo. "We have seen the worst of the capital flight. They now want room to breathe before the stock exchange opens next week."
One economist said he had not expected the central bank to intervene before the pound had fallen to 6 to the dollar.
"They are doing it earlier than the market had expected, which shows that they are taking seriously the issue of pound depreciation and they will intervene at any cost," said John Sfakianakis of Banque Saudi Fransi. - Reuters