Egypt pound's decline slows at 4th auction
Cairo, January 3, 2013
Egypt's pound slid further on Thursday at the central bank's fourth auction of foreign currency and hit a new record low in the interbank market although the pace of its decline slowed from earlier in the week.
The central bank said it sold $74.9 million sold to banks at Thursday's auction at a cut-off price of 6.3860 pounds.
That was weaker than Wednesday's cut-off price of 6.3510 to the dollar.
The pound has lost more than 3 percent of its value against the dollar this week at the auctions, which began on Sunday. They are part of a new currency regime designed to slow the depletion of the country's foreign reserves, which the central bank said had fallen to a critical level.
On the interbank market, the pound slipped to around 6.42 to the dollar, a new record low, from around 6.39 on Wednesday.
The bank has sold $75 million in foreign currency at all four auctions this week and economists say that, with its foreign reserves so low, Egypt cannot afford to continue its daily currency auctions.
Foreign reserves stood at $15 billion in November - a figure economists say covers less than three months of imports. The central bank is expected to release the December foreign reserves figure within days.
The country sank into crisis after the fall of Hosni Mubarak in a 2011 revolution but a new bout of political strife has wrecked the economy in the past weeks and sent Egyptians scrambling to swap pounds for U.S. dollars.
President Mohamed Mursi, under pressure to show authority and ease a growing sense of nervousness, has dismissed talk on the street that his nation was on the brink of bankruptcy. – Reuters