Egypt to support imports with dollar sale
Cairo, January 27, 2014
Egypt's central bank will restock the market with much-needed dollars on Monday, moving to ensure a steady flow of imports of staple foods against an increasingly volatile political backdrop.
The bank said it would sell $1.5 billion from its foreign reserves to cover strategic imports such as wheat, meat and cooking oil, in its largest ever exceptional currency auction.
It has been running down its hard currency reserves to prop up the Egyptian pound, but its coffers have been boosted by aid payments from Gulf states that support the military-backed government.
As the pound weakens, street prices of basic imported goods rise - ratcheting up already high political tensions and a symptom of the economic crisis that has gripped the most populous Arab nation since an uprising in 2011 overthrew autocrat Hosni Mubarak.
Monday's auction dwarfs the $40 million currency sale Egypt holds three times a week, and is also larger than the $1.3 billion the central bank offered at its last exceptional auction in September.
It will address a shortage of dollars that has hampered importers as well as fuelling an unofficial currency market.
"The timing of the auction is important in light of the price of the dollar in the black market and the volume of orders at banks to provide for strategic products," a central bank official told Reuters. - Reuters