Egypts central bank is expected
to report next week that it has slowed the rapid erosion of its
foreign currency reserves but failed to halt it, despite sharp
limits it has put on its sales of dollars, which economists say
are punishing business.
Investment bank CI Capital bank predicted a decline of another $900 million in central bank foreign reserves to $12.7 billion for February, ahead of the publication of the figure by the central bank around March 7.
The fall in Egypts foreign currency reserves is one of the biggest problems facing President Mohamed Mursi, who is trying to stave off economic collapse in the most populous Arab state since becoming its first elected leader last year.
Two years of political tumult and street unrest have prolonged an economic slump and wrecked the tourism sector that Egypt relies on for hard currency. Negotiations for a $4.8 billion loan from the IMF have been stalled while the country plans parliamentary elections, the sixth nationwide vote since autocrat Hosni Mubarak was toppled in a 2011 popular uprising.
Nearly two-thirds of Egypts reserves have vanished in the two years since the revolt. Foreign reserves fell by $1.4 billion to $13.6 billion in January, exacerbated by a $650 million repayment to the Paris Club of state creditors.
Economists say the slide in reserves is now being restrained in part by the central banks policy of limiting dollars available at auction, a policy that hurts businesses who need increasingly scarce hard currency for imports.
"We expect (reserves) to drop, but at a lower pace than last month because this month they dont have the $650 million payment for the Paris Club," said Mona Mansour, chief economist at CI Capital. "This will ease the drop a bit, as well as the (lower) amounts offered in the foreign currency auctions
Investment bank CI Capital bank predicted a decline of another $900 million in central bank foreign reserves to $12.7 billion for February, ahead of the publication of the figure by the central bank around March 7.
The fall in Egypts foreign currency reserves is one of the biggest problems facing President Mohamed Mursi, who is trying to stave off economic collapse in the most populous Arab state since becoming its first elected leader last year.
Two years of political tumult and street unrest have prolonged an economic slump and wrecked the tourism sector that Egypt relies on for hard currency. Negotiations for a $4.8 billion loan from the IMF have been stalled while the country plans parliamentary elections, the sixth nationwide vote since autocrat Hosni Mubarak was toppled in a 2011 popular uprising.
Nearly two-thirds of Egypts reserves have vanished in the two years since the revolt. Foreign reserves fell by $1.4 billion to $13.6 billion in January, exacerbated by a $650 million repayment to the Paris Club of state creditors.
Economists say the slide in reserves is now being restrained in part by the central banks policy of limiting dollars available at auction, a policy that hurts businesses who need increasingly scarce hard currency for imports.
"We expect (reserves) to drop, but at a lower pace than last month because this month they dont have the $650 million payment for the Paris Club," said Mona Mansour, chief economist at CI Capital. "This will ease the drop a bit, as well as the (lower) amounts offered in the foreign currency auctions
