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Egypt central bank says currency market stable

Deputy governor rules out intervention for time being

Reuters , Wednesday 16 Mar 2011
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Egypt's central bank said on Wednesday that the market for the Egyptian pound was stable and it would intervene only if there were imbalances or speculation.

The uprising that toppled the government of Hosni Mubarak has hammered tourism and foreign investment, two of Egypt's main sources of foreign exchange. Many analysts forecast the pound will weaken substantially as a result.

But the pound has lost less than 1.9 per cent of its value against the dollar since protests broke out on 25 January.

"We don't target prices. It is a supply and demand-driven market," Deputy Governor Hisham Ramez said by telephone. "This does not mean that we are allowing a devaluation. We see that the currency market is very stable and functioning very well."

He was speaking before Moody's said it had downgraded Egypt to Ba3 with a negative outlook.

"The most important issue is availability and liquidity," he added. "The Central Bank of Egypt will intervene only when there is any imbalance or speculation."

The central bank intervened on 8 February after the currency weakened to 5.960 to the dollar, a six-year low, a step that strengthened the pound by more than one per cent.

Ramez said at the time that the central bank had intervened because the market was speculative, and it would do so again if necessary.

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