Egypt's pound drops to new low against dollar
The Egyptian pound falls to LE6.92 against the dollar in banks, trades at an average of LE7.55 in the parallel market
Ahram Online, Tuesday 23 Apr 2013
(Photo: Ahram Online archive)
Egypt's ailing pound continues its depreciation, recording a new all-time low on Tuesday with an average of LE6.92 to the dollar, data from the Egyptian central bank showed.
"It is traded in the black market with an average of LE7.55 to the dollar," said Hani Genena, the head of research at Pharos Investment Bank.
Genena added that the Egyptian pound would take time to recover from devaluation, as there are liabilities the government needs to address in order to restore the stability of the currency.
Earlier this month, Qatar, Libya and Turkey pledged a total of $6 billion to help boost Egypt's economy. The country’s foreign reserves stand at $13.4 billion.
"The coming dollars will cover Egypt's imports of staple commodities and to pay back the dues of the foreign oil companies, so perhaps by the fourth quarter of the current year 2013 we may see the Egyptian pound's upturn," Genena told Ahram Online.
The downward slide against the dollar could help shrink the country's trade deficit through reducing imports, according to Genena.
Egypt's trade balance deficit decreased by 12 percent in January 2013 over the same month in 2012, registering LE17.79 billion (roughly $2.5 billion) in January 2013 versus LE20.2 billion a year earlier.
The Central Bank of Egypt (CBE) last week held an exceptional foreign exchange auction of $600 million that aimed at ensuring Egypt may continue to import essentials such as wheat, meat and cooking oil. The auction resulted in a cut-off price of LE 6.8720 to the dollar.
Egypt’s government is trying to accommodate the preconditions of the International Monetary fund (IMF) to obtain the eluded $4.8 billion loan, having updated its 2013/14 budget to meet the IMF's needed measures.
The IMF and Egypt hope to conclude talks for a loan deal "in the coming weeks," they said in a joint statement on Sunday.
The statement came after IMF managing director Christine Lagarde met an Egyptian delegation in Washington last weekend that included Central Bank of Egypt Governor Hisham Ramez and Finance Minister Al-Morsi Hegazy.
The Egyptian officials "are firmly committed to addressing Egypt's economic and financial challenges with the objective of restoring sustained and socially-balanced growth, and they are already taking encouraging actions in this direction," the brief statement read.