Egypt Shares Snap Longest Rally in Month on Dwindling Reserves
Egyptian stocks snapped the longest winning streak in a month, after the nation’s foreign-currency reserves fell to the lowest level in more than 15 years, threatening further weakening of the local currency.
Commercial International Bank Egypt SAE, the country’s biggest publicly traded lender, headed for its lowest close this year. Talaat Moustafa Group Holding, the biggest publicly traded property developer, was poised for its steepest decline in almost three weeks. The benchmark EGX 30 Index broke a five-day string of gains, losing 1.7 percent to 5,698.79 at 12:43 p.m. in Cairo.
Egypt’s net foreign reserves slumped in January to $13.6 billion from a month earlier after the country paid-down debt and investment inflows remained weak amid political instability. The Egyptian pound has lost 5 percent this year, making it the worst-performing currency in the Middle East after the central bank eased its support.
The reserves data “was very ugly,” Tamer Nigm, head of sales trading at Cairo-based Watheeqa Securities, said by phone. “This has the potential to further weaken the pound as investors took notice from the drop that there’s still more to come.”
The pound weakened 0.2 percent to 6.7119 a dollar as of 12:23 p.m. in Cairo today after the central bank held its 18th auction of the American currency since the practice was started in December. That brings the currency’s decline over that period to 7.8 percent, the biggest since the 2003 devaluation.
CIB dropped 4.7 percent to 35 pounds. The lender was cut by Fitch Ratings this week to B with a negative outlook, on par with Egypt’s rating five levels below investment grade.
Talaat Moustafa fell 3.2 percent to 4.27 pounds. The company said yesterday a judicial panel issued a non-binding recommendation that the Egyptian government take back a three- million square meter plot sold to one of its units. A court will hear the case beginning Feb. 12.
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