Egypt Independent

Foreign reserves at critical low, Central Bank says

Foreign reserves are now at a critical low and must be maintained to repay the foreign debt to preserve the country's reputation in global financial markets and to import strategic goods, the Central Bank of Egypt said in a statement Saturday.

The bank appealed to businesses to rationalize foreign exchange, promote local industries and avoid high-risk speculation.

Since the beginning last year, the economy has been facing serious challenges resulting from political instability.

As of yesterday, the bank launched FX auctions, a mechanism in which banks periodically offer to buy or sell foreign currency to rationalize foreign reserves.

The bank has reiterated its commitment to paying foreign debt interests and remitting transactions of foreign investors in the stock market.

It has also reassured of the strong ability of banks to ensure hard and local currency deposits.

The bank said the most significant challenges in the past two years were the decline in tourism revenues by an annual 30 percent, in direct foreign investment by 100 percent, and the lowering of Egypt’s credit rating by five points, which shifted the balance of payments surplus of US$1.3 billion at the end of 2010 to a current deficit of $21.6 billion.

Edited translation from Al-Masry Al-Youm