Bloomberg News

Egypt Lowers Size of Dollar Auction With Reserves at 15-Year Low

February 06, 2013

Egypt will offer $50 million at a currency auction today, reducing the amount of dollars available to banks by a third after the nation’s foreign reserves dropped to a 15-year low. The benchmark dollar bonds fell a ninth day.

Banks may submit three bids for as much as $7 million at the auction, the central bank said in an e-mailed statement, adding it would hold another sale tomorrow. Lenders paid a weighted average of 6.692 Egyptian pounds a dollar at the last auction on Feb. 4, down 0.1 percent from the previous sale.

The pound has weakened 7.6 percent since the central bank started its policy of auctioning dollars on Dec. 30, the steepest decline since the currency’s devaluation in 2003, according to data compiled by Bloomberg. Egypt sold $882 million of the U.S. currency to lenders in January, the data show. Net international reserves fell by $1.4 billion last month to $13.6 billion, central bank data showed yesterday.

Prime Minister Hisham Qandil told reporters today the country will invite the International Monetary Fund to Cairo in the next few days as it seeks to conclude a $4.8 billion loan agreement. The pound was unchanged at 6.702 a dollar as of 10:48 a.m. in Cairo, according to prices compiled by Bloomberg. Egypt started the foreign-exchange auctions to limit banks’ access to dollars after reserves fell to a level it called “critical.”

The yield on the government’s 5.75 percent dollar- denominated bonds advanced one basis point, or 0.01 of a percentage point, to 6.7 percent. That’s the highest level on a closing basis since June.

To contact the reporter on this story: Ahmed A. Namatalla in Cairo at anamatalla@bloomberg.net

To contact the editor responsible for this story: Alaa Shahine at asalha@bloomberg.net


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