More aggressive action: Egypt's Central Bank releases $22B to clear goods blocked at ports

Published March 28th, 2016 - 07:00 GMT
Egypt, which relies heavily on imports, has been facing a dollar shortage since a popular uprising in 2011 drove away tourists and foreign investors, both major sources of hard currency.  (File photo)
Egypt, which relies heavily on imports, has been facing a dollar shortage since a popular uprising in 2011 drove away tourists and foreign investors, both major sources of hard currency. (File photo)

Egypt's Central Bank Governor Tarek Amer said on Saturday that devaluing the Egyptian pound had attracted foreign investment worth $500 million in treasury bills and that he had pumped $22 billion into the banking system to clear goods piled at ports.

Speaking in a pre-recorded interview aired on a local talk show late on Saturday, Amer also said: "There is no currency crisis, there is merely a crisis in managing the foreign exchange market, and we will roll out an alternative plan for managing the market in the next three months."

"The decision wasn't a devaluation, it was correcting the situation and we had planned for it in advance. Its advantages will outweigh its disadvantages," he added.

Amer said Egypt would pay back a $1 billion debt owed to Qatar in July and also $800 million to Paris Club countries.

He said dollar-denominated "Belady" certificates offered by the three largest state-owned banks in recent weeks to Egyptians abroad in a bid to persuade them to invest their dollar savings in their home country had seen a very low turnout.

Amer has moved aggressively in recent weeks to bring dollars into a banking system starved of foreign currency and slow the rapid fall of the Egyptian pound on the black market.

He surprised markets this month by removing dollar deposit and withdrawal caps, devaluing the currency by 13 percent in a single day, declaring a more flexible exchange rate and injecting hundreds of millions of dollars despite critically low reserves.

Egypt, which relies heavily on imports, has been facing a dollar shortage since a popular uprising in 2011 drove away tourists and foreign investors, both major sources of hard currency.

The central bank had been keeping the pound artificially strong through regular auctions three times a week. Its reserves more than halved to $16.5 billion in February from around $36 billion in 2011.

By Ehab Farouk, Ahmed Tolba and Ahmed Aboulenein; Editing by Gareth Jones

Reuters content reproduced with permission

 

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