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30-12-12

Egypt foreign reserves fall to a critical level in November

(MENAFN) Egypt's foreign reserves have reached a critical level in November, pointing to a deepening crisis, Reuters reported. The central bank said reserves fell by USD448 million last month to only USD15.04 billion, 60 percent down on their level on the eve of the uprising that swept president Hosni Mubarak from power in February 2011. This is barely enough to cover three months of imports, and bankers said the December figure could be even worse. It added that it would start foreign currency auctions to conserve reserves, just two hours after Mursi used a major policy speech to declare the economy was showing signs of improvement. The central bank has spent more than USD20 billion in foreign reserves to support the pound since a mass uprising against Hosni Mubarak in early 2011 chased away tourists and foreign investors. Investors and ordinary citizens have rushed in to change Egyptian Pounds with foreign currency over concerns the government might devalue or bring in capital controls. The bank allowed the pound to weaken to an eight-year low of 6.188 to the US dollar on Thursday. On Saturday it urged Egyptians to "rationalise their use" of foreign currency and not speculate against the pound. President Mursi told the upper house of parliament recently that the economy is improving citing a return of tourists and an increase in annual economic growth in the third quarter to 2.6 percent from 1.8 percent a year earlier. He also cited a USD1.1 billion rise in foreign exchange reserves to USD15.5 billion from July to November.

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