Critical reserves: Egypt starts currency auctions

CAIRO: 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.

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 current level of foreign currency reserves represents the minimum and critical limit,” the bank said on its website on Saturday. The new system will take affect as of Sunday, December 30, and run alongside and not affect the current interbank currency market, the bank said.

Published in The Express Tribune, December 30^th, 2012.

Like Business on Facebook to stay informed and join in the conversation.