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Egypt to hold $600 mln auction to cover strategic imports

The Central Bank of Egypt holds an exceptionally large currency auction to cover strategic imports

Reuters, Sunday 14 Apr 2013
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Egypt's central bank will hold an exceptional foreign exchange auction for $600 million on Sunday to cover strategic imports, it said in a statement as it struggles to pay for fuel and wheat.

The auction, to be held between 1.30 and 2.00 p.m. Cairo time (1130 and 1200 GMT), is 15 times the size of the three $40 million currency auctions the cash-strapped central bank has been holding weekly in recent months.

The most populous Arab nation is grappling with an economic crisis caused by more than two years of political instability. Egypt's foreign currency reserves are at critically low levels and the government is struggling with an unaffordable deficit.

Shortages of imported fuel are disrupting transport and causing power cuts in the country of 84 million. The situation is expected to worsen as summer approaches and Egyptians switch on their air conditioning.

The world's biggest importer of wheat, Egypt has cut back on international purchases this year in the hope of a bumper local harvest.

The central bank auction, for which no quotas will be applied, coincides with the start of the wheat harvest for which farmers urgently need fuel supplies to run harvesters and transport the crop to storage centres.

In a boost to Egypt's finances, Qatar this week agreed to buy $3 billion in government bonds and to supply natural gas in the summer when it is needed. Libya also agreed to deposit $2 billion with the Egyptian central bank.

The government is also in talks with the International Monetary Fund on a $4.8 billion loan deal that would unlock billions more in international support.

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