Egypt Changes Central Bank Chief in Fight to Boost Pound
Egypt appointed Hisham Ramez to take over as governor of a central bank that’s fighting to preserve public confidence in the pound after it plunged to a record low.
President Mohamed Mursi approved the nomination of Ramez late yesterday after accepting the resignation of Farouk el- Okdah. The outgoing chief said he had planned for some time to retire. Ramez will take charge on Feb. 3 and serve until November 2015 if the appointment is backed by Egypt’s upper house of parliament.
The pound has slid more than 5 percent in two weeks. The plunge comes after two years in which the central bank kept the currency stable through the political instability that followed the uprising against Hosni Mubarak, spending about 60 percent of Egypt’s foreign reserves in the period. Seeking to shield its remaining $15 billion stockpile, the bank introduced daily dollar auctions last month to cap the amount lenders can buy.
Amir Albeir, a 49-year-old electrician, voices the kind of concerns about the currency that authorities are seeking to allay. He says he changed about 220,000 Egyptian pounds ($34,000) to dollars and bought gold worth a similar amount, making the move after seeing others convert their savings.
“I saw the pound losing its value, and that scared me,” Albeir said in an interview. “The situation isn’t good, so it’s very likely that the pound will depreciate even more.” He said he didn’t deposit the dollars he bought in a bank, and plans to buy more soon.
The pound dropped to 6.5424 per dollar after yesterday’s auction, in which the central bank sold $49.1 million.
The central bank’s role, usually focused on inflation, “switched to exchange-rate stability” in the period since the 2011 uprising, Said Hirsh, head of economics at Maplecroft, a U.K.-based risk adviser, said in response to e-mailed questions. Policy probably won’t change much under Ramez, he said.
Egypt’s economic growth has slowed to an average annual rate of about 2 percent since the revolt, as tourists and investors stayed away. HSBC Holdings Plc (HSBA) predicted another year of similarly sluggish expansion in a report this week, citing political tensions and delays in a $4.8 billion International Monetary Fund loan.
The government says a deal with the IMF will help boost investor confidence and encourage other lenders and donors. Egypt asked for a delay last month after Mursi suspended tax increases linked to its IMF-backed economic plan amid political tensions.
Egypt has received financial support from Qatar, the energy-rich Gulf emirate which has ties with Mursi’s Muslim Brotherhood. Qatar deposited $2 billion in Egypt’s central bank last month, doubling its total funds there, Nidal Assr, sub- governor of the bank, said in an e-mail yesterday.
Qatar also said this week it sent a $500 million grant. Turkey transferred the second half of a $1 billion concessionary loan, the official Middle East News Agency said yesterday.
Ramez was deputy central bank governor before he resigned months after the 2011 uprising to become vice president and managing director of Commercial International Bank Egypt SAE (COMI), the biggest publicly traded lender. He began his financial career at Bank of America Corp. in 1982 and has also been a board member of the Egyptian-American Business Council and the Arab Monetary Fund, according to the Federation of Egyptian Banks.
Ramez told reporters yesterday that “the central bank has all the tools to be able to intervene if we feel there is speculation” in the foreign-exchange market. “There’s no cause for worry,” he said. “We can control the matter at any time.”
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