Last Update 16:20
Friday, 25 May 2018

Egypt pound weakens to 7-year low

With speculation that the Central Bank of Egypt might be allowing the pound to decline gradually, investment bank EFG-Hermes revises its forecast for the pound to fall to 6.25 to the dollar by the end of 2012

Reuters, Monday 3 Sep 2012
Egypt pound weakens
Economists expect Egypt’s currency to fall 9 per cent in the coming year (Photo: AP)
Views: 2421
Views: 2421

The Egyptian pound inched lower on Monday to its weakest in more than seven and a half years after the central bank released data on the country's foreign reserves which some economists said showed an underlying weakness.

The pound ended at a weighted average of 6.1015 to the U.S. dollar on Monday, its lowest since 30 December, 2004. On Sunday it was last bid at 6.097.

EFG-Hermes said in a note on Monday that the central bank seemed committed to a policy of allowing the pound to decline gradually.

The weakening indicated that "the central bank is moving relatively more aggressively than we expected ... suggesting that our end-2013 forecast of EGP 6.40 may be realized earlier," the note said.

EFG had now revised its forecast for the pound to fall to 6.25 to the dollar by the end of 2012 instead of its previous forecast of 6.10.

The central bank has spent more than $20 billion to support the pound since last year's popular uprising chased away tourists and foreign investors, two of its main sources of foreign exchange.

Economists said higher foreign reserves included one-off items, such as a $500 million loan from Qatar and a 513 million euro-denominated treasury bill, that concealed a continuing drain on the country's balance of payments.

The pound has lost less than 5 per cent of its value against the dollar since the uprising that toppled Hosni Mubarak in February 2011.

Egypt last month formally requested a $4.8 billion loan from the International Monetary Fund to help it plug a balance of payments deficit worsened by the uprising. 

Short link:


Ahram Online welcomes readers' comments on all issues covered by the site, along with any criticisms and/or corrections. Readers are asked to limit their feedback to a maximum of 1000 characters (roughly 200 words). All comments/criticisms will, however, be subject to the following code
  • We will not publish comments which contain rude or abusive language, libelous statements, slander and personal attacks against any person/s.
  • We will not publish comments which contain racist remarks or any kind of racial or religious incitement against any group of people, in Egypt or outside it.
  • We welcome criticism of our reports and articles but we will not publish personal attacks, slander or fabrications directed against our reporters and contributing writers.
  • We reserve the right to correct, when at all possible, obvious errors in spelling and grammar. However, due to time and staffing constraints such corrections will not be made across the board or on a regular basis.

© 2010 Ahram Online.