Archive for foreign currency

As the value of the pound falls and the country struggles to deal with a foreign currency shortfall, Planning and International Cooperation Minister Ashraf al-Araby said Wednesday that the government hopes to increase foreign reserves from US$15 billion to $19 billion by the end of June.

The minister, who announced the goal during a community dialogue session at the Economic Research Forum, did not specify how the government would increase foreign reserves by $4 billion as part of efforts to restore the economy. The talks are part of a national initiative for economic consensus put forth by the government several days ago.

The Central Bank of Egypt announced Saturday that foreign reserves were critically low and introduced a new regime including regular currency auctions that allowed the pound to slip to an all-time low of 6.3 to the US dollar Sunday.

According to the CBE, reserves are at the lowest level needed to meet international debt requirements. Economic experts say the just over $15 billion in reserves barely cover three months of imports, thus compromising the country's ability to supply the consumer market with vital commodities.

Government sources said Wednesday that reserves would be strengthened by a $4.8 billion loan from the International Monetary Fund expected to be finalized in January, and a $500 million loan from Turkey, in addition to increasing tourism and foreign investment.

Araby said that the government has made​​ short, medium and long-term plans to address the country's economic crisis and ballooning state budget deficit, which had increased to 11 percent of GDP by mid-2012.

The government plans to reduce the budget deficit to 10.4 percent in the current fiscal year 2012/2013, and then to 8.5 percent in the next fiscal year, which begins in July.

The government also hopes to double national revenue over the next 10 years, according to Araby. This requires the increase of investment from 15 percent to 22 percent of the Gross National Product (GNP) by 2017, and to 30 percent by 2022, he said.

The government is also targeting a 7 percent growth rate to be reached over the next 10 years. The growth rate was 2.5 percent in 2012, the second year of political unrest and uncertainty following the 2011 revolution.  

The state will also endeavor to reduce unemployment from around 13 percent to less than 6 percent over the next 10 years, Araby said.

Edited translation from MENA

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Egypt’s central bank said it was offering to sell $75 million to banks on Monday at its second foreign currency auction, with a maximum of $11 million per bank.The auctions are part of a shift in currency policy announced on Saturday and designed to conserve the country’s foreign reserves, which the bank says are critically low, according to reuters. The bank also offered $75 million at its ma

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Foreign reserves are now at a critical low and must be maintained to repay the foreign debt to preserve the country's reputation in global financial markets and to import strategic goods, the Central Bank of Egypt said in a statement Saturday.

The bank appealed to businesses to rationalize foreign exchange, promote local industries and avoid high-risk speculation.

Since the beginning last year, the economy has been facing serious challenges resulting from political instability.

As of yesterday, the bank launched FX auctions, a mechanism in which banks periodically offer to buy or sell foreign currency to rationalize foreign reserves.

The bank has reiterated its commitment to paying foreign debt interests and remitting transactions of foreign investors in the stock market.

It has also reassured of the strong ability of banks to ensure hard and local currency deposits.

The bank said the most significant challenges in the past two years were the decline in tourism revenues by an annual 30 percent, in direct foreign investment by 100 percent, and the lowering of Egypt’s credit rating by five points, which shifted the balance of payments surplus of US$1.3 billion at the end of 2010 to a current deficit of $21.6 billion.

Edited translation from Al-Masry Al-Youm

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Egypt’s central bank said it was offering $75 million at its first foreign currency auction on Sunday, with a maximum $11 million per bank.
The auction is part of a new currency regime the bank announced on Saturday to conserve its foreign reserves, which it said have fallen to a critical level.
Under the regime, Egyptian banks will not be able to hold long positions in U.S. dollars of more

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Egypt's central bank introduced a new auction system for buying and selling US dollars to help conserve foreign reserves, which it said had reached a critical level.

Political turmoil over the last month has prompted a rush by investors and ordinary citizens to switch their Egyptian pounds into foreign currency on concerns the government might devalue or bring in capital controls. 

The central bank has spent more than US$20 billion in foreign reserves to support the pound since a popular uprising toppled Hosni Mubarak in early 2011 as turmoil has chased away tourists and foreign investors.

Reserves fell by $448 million in November to $15.04 billion, enough to cover barely three months of imports, and bankers said the rush to buy dollars was certain to have drained foreign reserves even further in December. The bank is expected to report December figures in the first week of January.

"The current level of foreign currency reserves represents the minimum and critical limit," the bank said on its website on Saturday.

"This requires their being conserved for critical uses, as represented in fulfilling foreign debt obligations to preserve Egypt's reputation in international financial markets and to cover imports of strategic commodities," it added.

The new system will take effect as of Sunday, 30 December, and run alongside and not affect the current interbank currency market, the bank said.

It said the auctions would be held regularly and that banks would be asked to submit bids but gave few other details.

Egypt said it would continue to meet installments and interest payments on its foreign debt and allow transfers by foreigners who had invested on the stock exchange.

The central bank said the banking system's finances remained "strong and secure" but called on Egyptians to "rationalize their use" of foreign currency and not to speculate.

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Egypt has banned travelers from carrying more than US$10,000 in foreign currency cash in or out of the country, as officials worry over pressure on its pound currency and a rush by Egyptians to withdraw their savings from banks.

Political turmoil over the past month has raised fears among ordinary citizens that the government — which has pushed back talks to seal IMF funding till January — may not be able to get its fragile finances under control.

The Central Bank has spent more than $20 billion of its foreign reserves to support the pound since the popular uprising that toppled Hosni Mubarak in early 2011. It now has only $15 billion, which is equal to only about three months of imports cover.

Presidential spokesperson Yasser Ali on Tuesday confirmed the government decision, which includes US dollars or their equivalent in other foreign currencies. The decision also forbids sending cash through the mail.

The decision prohibits all travelers from "bringing foreign currency into the country or carrying it out to only $10,000."

Any funds over $10,000 must be transferred electronically, Ali added.

Previously, travelers were simply required to declare any amounts above $10,000 to authorities on their way in or out.

Bankers say depositors had been withdrawing greater amounts of cash from their accounts since President Mohamed Morsy issued a constitutional declaration last month that expanded his powers and threw the country into a political crisis.

The crisis has complicated a $4.8 billion loan the government is seeking from the International Monetary Fund.

The IMF had been due to approve the loan on 19 December, but the government asked for a delay after it cancelled a series of unpopular austerity measures deemed essential for its approval.

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The foreign reserves rose by US$441 million in October, the Central Bank of Egypt said on its website Monday.

Net international reserves were $15.48 billion at the end of October, up from $15.04 billion at the end of September, the bank said.

The reserves have plunged by more than half since a popular uprising in January 2011, which scared away tourists and investors, two of the country’s main sources of foreign currency.

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Foreign reserves probably rose US$300 million to $400 million in October thanks to loans from Qatar and Turkey, state-run Al-Gomhurriya newspaper reported Monday, quoting an unnamed Central Bank official.

The reserves have fallen by more than half since the January 2011 revolution that scared away tourists and investors, two of the country’s main sources of foreign currency.

Reserves at the end of October will probably be $15.4 billion or $15.5 billion, up from $15.04 billion at the end of September, Al-Gomhurriya said.

Qatar lent Egypt $500 million in October, its second such loan in the last three months, and Turkey lent the country another $500 million. Egypt drew $600 million from reserves to pay for petroleum imports and $100 million to repay foreign loans, the newspaper quoted the official as saying.

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Egypt's foreign reserves fell by US$84 million in September, but held above $15 billion for a third straight month after foreign donors began fulfilling promises of aid to the country’s troubled economy.

Net international reserves fell to $15.04 billion at the end of September, from $15.13 billion at the end of August, the Central Bank of Egypt said on its website.

The reserves have plunged by more than half since a popular uprising in January 2011, which scared away tourists and investors, two of the country’s main sources of foreign currency.

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Revenue from Egypt's Suez Canal will not fall this year from the US$5.2 billion it achieved in 2011, the head of the Suez Canal Authority Mohab Memish said on Thursday.

Memish said the canal, which is a vital source of foreign currency in Egypt along with tourism, oil and gas exports and remittances from Egyptians living abroad, was among the most profitable entities in the country.

Revenue rose to $446.6 million in August, up three percent from July.

The canal authority raised toll fees for all vessels passing through the waterway by three percent in March.

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