Egyptian Foreign Reserves Decline Slows, Giving Time for IMF Loan Accord
Egypt’s foreign-currency reserves declined in February by the smallest amount in more than a year, giving the Arab country additional time to secure a $3.2 billion loan from the International Monetary Fund.
Net official reserves fell about $640 million to $15.7 billion, according to central bank data released today. The average estimate of six economists surveyed by Bloomberg News was for a $1.1 billion decline.
Reserves have fallen for 14 straight months since last year’s uprising. Economists such as Jean-Michel Saliba of Bank of America-Merrill Lynch said a slower drop may improve investors’ confidence as the government seeks external financing to contain record borrowing costs, which spiraled as foreign investors fled following the revolt that toppled Hosni Mubarak.
The pace of decline eased “on the back of a bit of confidence in the markets this month and optimism over the IMF deal and political progress,” Liz Martins, Dubai-based senior economist at HSBC Holdings Plc said by phone. “It’s good news but it doesn’t change any of our fundamental views that Egypt’s external position is still under pressure and that the currency is still under pressure.”
Egypt’s benchmark stock index gained about 15 percent in February. The measure has soared about 47 percent this year, making it the best-performing among global markets tracked by Bloomberg. The Egyptian pound was unchanged in February. It has fallen 3.8 percent since the start of last year.
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