Egypt Shares Snap Longest Rally in Month on Dwindling ReservesAhmed A. Namatalla
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, fell to the lowest level in a week. Talaat Moustafa Group Holding, the biggest publicly traded property developer, dropped the most in more than two weeks. The benchmark EGX 30 Index broke a five-day string of gains, losing 1.8 percent to 5,690.93 at the close in Cairo.
Egypt’s net foreign reserves slumped 9.3 percent in January to $13.6 billion after the nation paid-down debt and investment inflows remained low amid political instability. The Egyptian pound has weakened more than 5 percent this year, making it the Middle East’s worst-performing currency, data compiled by Bloomberg show.
The reserves data were “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 2:38 p.m. in Cairo after the central bank held its 18th dollar auction since the regulator started them on Dec. 30. That brings the currency’s decline over that period to 7.8 percent, the largest slide since the 2003 devaluation.
The central bank is auctioning dollars to limit banks’ access to the currency to slow the depletion of reserves, which are down more than 60 percent in the past two years.
Commercial International dropped 3.7 percent to 35.35 pounds, the lowest since Jan. 29. The lender was cut by Fitch Ratings this week to B, five levels below investment grade and on par with the sovereign.
Talaat Moustafa fell 2.7 percent, the most since Jan. 21, to 4.29 pounds. A panel of judges recommended that the government withdraw a plot of land sold to Talaat’s unit Port Venice, the company said yesterday. A court will hear the case beginning Feb. 12.