Egypt’s international reserves rose to $15.1 billion in August after their biggest gain since the uprising that ousted President Hosni Mubarak last year.
Gross reserves climbed by $705 million from $14.4 billion the previous month, according to data posted on the central bank’s website today. The figure was shy of projections outlined by the country’s legal affairs minister, Mohamed Mahsoub, who had said last week reserves were likely to climb by about $1 billion. Mahsoub said the gains would be partly fuelled by a $500 million deposit in the central bank by Qatar.
“On the surface, it may appear to be positive news, but it doesn’t signal any fundamental turnaround in the economy,” Wael Ziada, head of research at Cairo-based EFG-Holding SAE, said by phone. The increase “isn’t based on sustainable capital inflows or a decline in the current account deficit.”
The gains are critical for Egypt, which has seen international reserves plunge by roughly 60 percent since the start of the uprising that pushed Mubarak from power.
The Egyptian pound, subject to a managed float, has weakened 4.7 percent since the uprising to 6.1028 a dollar on Aug. 31, the lowest level since December 2004. Egyptian officials, including President Mohamed Mursi, have said they are not considering devaluing the currency.
The increase in reserves “gives the central bank more room to defend the currency,” Ziada said.
An International Monetary Fund team is expected to arrive in Cairo this month to discuss the country’s request for a $4.8 billion loan, funding seen as key in helping secure backing from other lenders and donors.
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