Monday, December 31, 2012

Egyptian Currency Sinks

Last week I had noted a story about Egypt imposing restrictions on moving currency out of the country. The Financial Times (h/t Drudge) is now reporting that the Egyptian pound has fallen to record lows. The story indicates:
The pound slid from 6.18 to 6.30 to the dollar on Sunday after the central bank held its first foreign currency auction as part of a new system introduced to slow down the depletion of the country’s reserves.

... Last week, for the first time in eight years, banks and exchange bureaus turned away anxious customers seeking to convert their savings into dollars, citing shortages.

...On Saturday the central bank warned that foreign reserves had reached the “critical minimum” needed to meet debt repayments and fund food and fuel imports.

Reserves now stand at $15bn down from $36bn just before last year’s popular uprising which unseated Hosni Mubarak as president.

The bank is also reported to have imposed measures to dampen demand for foreign currencies including limiting corporate clients from withdrawing more than $30,000 in cash per day and charging individuals who buy foreign currencies a 1-2 per cent administrative fee.

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