Central Bank: Foreign reserves at 16-year low

Central Bank: Foreign reserves at 16-year low

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Tue, 05/02/2013 - 17:07

The Central Bank announced on its website Tuesday that foreign reserves had fallen to US$13.613 billion in January, compared to $15.0147 billion at the end of last year.

According to financial news agency Bloomberg, January's foreign reserve watermark is the lowest since 1997. 

"The fall in Egypt’s FX reserves last month underlines the limited firepower that the authorities have to stem depreciation pressures on the pound. We think the pound could fall a further 10 percent or so over the coming months to $7.50," Capital Economics, a macroeconomic research company,  wrote in an emailed statement. 

The $1.4 billion month-on-month decline, which includes currencies, gold and “special drawing rights,” is partially due to a Paris Club debt payment worth $619 million, Bloomberg also reported.

In December, the Central Bank said foreign reserves had dropped to a critical level and could not cover three months of imports.

In response to declining reserves, the bank launched restrictions on buying and selling foreign currency to curb the outflow of US dollars brought on by unrest in the two years following the 25 January uprising. Reserves totaled $36 billion before the revolution that ousted former President Hosni Mubarak.

Last month, Finance Minister Morsy Hegazy had told media that foreign reserves had actually increased to $15.5 billion due to a deposit as part of Qatar’s financial aid package.