Egypt will not float pound until foreign currency reserves rise

22 February 2016

Egyptian pound will not be floated until the foreign currency reserves reach $25bn-30bn

The banking regulator in Egypt has no plans to float the Egyptian pound until the foreign currency reserves in the most populous Arab country reach $25bn-to-$30bn level from the current $16.48bn, according to central bank governor, Tarek Amer.

“When foreign reserves reach $25-or-$30 billion then maybe we can think about it,’’ Reuters news agency quoted Amer as saying during an Egyptian talk show. “We are mindful of society.”

The import-dependent Egypt has been grappling with foreign currency shortages since a popular uprising in 2011 over threw former President Hosni Mubarak. The following political upheaval and security concern drove foreign investors and tourists away from the North African country, drying up its main sources of foreign currency.

The central bank has been under pressure to devalue the pound, but surprised markets by strengthening it 20 piasters in November. It has held the pound steady ever since.

Foreign currency reserves have tumbled from $36 billion in 2011 to $16.48 billion at the end of January, and the country has been rationing dollars through weekly dollar auctions to banks, keeping the pound artificially strong, according to Reuters

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