Egypt’s international reserves rose to $15.1 billion in August after their biggest gain since the uprising that ousted President Hosni Mubarak last year.
Gross reserves climbed by $705 million from $14.4 billion the previous month, according to data posted on the central bank’s website today. The figure was shy of projections outlined by the country’s legal affairs minister, Mohamed Mahsoub, who had said last week reserves were likely to climb by about $1 billion. Mahsoub said the gains would be partly fuelled by a $500 million deposit in the central bank by Qatar.
“On the surface, it may appear to be positive news, but it doesn’t signal any fundamental turnaround in the economy,” Wael Ziada, head of research at Cairo-based EFG-Holding SAE, said by phone. The increase “isn’t based on sustainable capital inflows or a decline in the current account deficit.”
The increase comes as Egypt sold its first euro-denominated Treasury bills last month, raising 513 million euros ($645 million). Reserves have plunged by more than half since the start of the January 2011 uprising that pushed Mubarak from power, as foreign investment and tourism slumped.
The Egyptian pound, subject to a managed float, has weakened 4.7 percent since the uprising to 6.1028 a dollar on Aug. 31, the lowest level since December 2004. It lost 0.4 percent in August, the most this year.
Egyptian officials, including President Mohamed Mursi, have said they are not considering devaluing the currency.
“It continues to gradually depreciate, and the increase in foreign reserves doesn’t change that view,” Liz Martins, Dubai-based senior economist at HSBC Holdings Plc, said by telephone. “We do still expect it to move downwards, but now there’s a more stable backdrop to do so.”
HSBC forecasts the currency will weaken to 6.6 pounds per dollar by the end of the year. The average of five analyst estimates compiled by Bloomberg is for the currency to weaken to 6.38 a dollar. That would be the lowest level since Bloomberg started tracking the pound in 1993.
An International Monetary Fund team is expected to arrive in Cairo this month to discuss the country’s request for a $4.8 billion loan, funding seen as key in helping secure backing from other lenders and donors.