Egyptian Pound Drops Most in 11 Months Amid Absence of Gulf AidAhmed A. Namatalla
The Egyptian pound capped its worst month in almost a year as Persian Gulf aid dried up and the price of dollars on the black market increased.
The local currency lost 0.1 percent to 6.9976 a dollar at an official currency sale today, according to central bank data on Bloomberg, taking April’s decline to 0.6 percent, or the most since May last year. The interbank rate retreated to 7.0076 a dollar. The government didn’t announce any new aid from Persian Gulf allies in April.
The pound’s weakness comes after the central bank said April 1 it cleared demand for foreign currency from overseas equity investors who sold holdings following the 2011 ouster of President Hosni Mubarak. Saudi Arabia, the United Arab Emirates and Kuwait offered at least $12 billion in aid after Islamist President Mohamed Mursi was forced from office by the military in July.
“In the absence of aid, the pound is coming under pressure,” Amr Seif, chief dealer at Piraeus Bank Egypt, said by phone from Cairo. “This may help cut demand for the dollar as it becomes more expensive.”
About a fifth of banks’ demand for the greenback was met at today’s currency sale, in line with the trend set over the past year. In the black market, the dollar was selling at 7.513 pounds yesterday, according to the average of four money changers surveyed by Bloomberg who asked not to be identified because trading outside official pricing is illegal. That compares with 7.415 pounds per dollar at the end of March.
The Federation of Egyptian Chambers of Commerce plans to publish a black-market gauge for the dollar, Al Mal newspaper reported today. Starting next month, the index is to be used as a guide for importers in tax accounting, according to the report.
Government borrowing costs rose at a 6.5 billion-pound ($927 million) auction of treasury bills, according to central bank data on Bloomberg. The yield on six month notes climbed 17 basis points, or 0.17 of a percentage point, to 10.883 percent. The one-year yield rose 23 basis points to 11.075 percent. The rates are the highest since December and January, respectively, according to data compiled by Bloomberg.
The yield on the government’s benchmark $1 billion of 5.75 percent Eurobonds due in April 2020 retreated one basis point to 5.31 percent as of 4:28 p.m. in Cairo. That pares its increase this month to seven basis points.