Egypt forex decline slows in August

Egypt’s net foreign reserves (forex) slipped by $700 million to $25.01 billion last month from July, figures on the central bank’s website showed, showing the outflow of funds had continued to slow from a peak in the wake of a popular uprising. Foreign reserves fell by $860 million in July to $25.71 billion. The central bank has said the drawdown of reserves was a temporary measure to cover a balance of payments gap until the economy gets back on its feet following the uprising that drove Hosni Mubarak from office on Feb.11. In June, the reserves appeared to have fallen by just $659 but a strategist said the figure was skewed because an upward revision in the value of Egypt’s gold was worth $563 million in June, the end of its financial year, so foreign reserves had actually fallen by $1.2 billion that month.EFG-Hermes strategist Simon Kitchen said August’s unofficial reserves fell by $560 million to close to zero in August, having risen in the previous two months. “Unofficial reserves,” referred to as other foreign currency assets by the central bank, are additional assets held with commercial banks but not included in official reserve figures. “Changes in this figure typically reflect foreign buying and selling of Egyptian T-bills. The fall in August may well reflect rising risk aversion in global financial markets in August,” said Kitchen.Revenue from the Suez Canal, a waterway that is a vital source of foreign currency for Egypt, rose 11 per cent year on year to $449.2 million in July, and up 0.9 per cent from a month earlier. The canal’s activities have been relatively unscathed by the turmoil in the wake of the uprising. Egypt has no plans to issue an international bond currently and will rely on local market to meet its financing requirements, the country’s finance minister said on Wednesday. When asked if the country was looking at an international bond sale, Hazem el-Beblawi said, “International markets? No. Internal? We issue bonds regularly, locally.” He also said inflation in the North African country is ‘relatively under control’ at a meeting of Arab finance ministers inAbu Dhabi. Egypt’s central bank kept its benchmark interest rates on hold last month reflecting continued concern about inflation and analysts expect rates to remain unchanged. From / Gulf Today