Dollars start running out for Egypt's currency bureaus
Reuters Sun, 17/02/2013 - 19:00
http://www.egyptindependent.com/news/dollars-start-running-out-egypt-s-currency-bureaus

Egypt's currency bureaus are being overwhelmed by demand for dollars amid a
supply fueled by political crisis, the head of the foreign exchange
department at the Chambers of Commerce said.

Mohamed al-Abyad said foreign exchange offices can only supply 20 percent of
the dollars for which they receive orders.

"With the dollar shortage, there is a semi-halting of our operations," he
told Reuters in an interview.

More than two years of political instability following the overthrow of
President Hosni Mubarak in 2011 has triggered a flight into dollars and
disrupted foreign investments.

That has caused a devaluation of the local pound, which has dropped over 8
percent against the dollar in the past two months, and drained the country's
foreign reserves.

The currency crisis has also driven some dealers into the streets in search
of people with dollars to sell, spawning a new black market.

In an attempt to control the rate of the pound's decline, the Central Bank
of Egypt introduced a regular dollar auctions in December. Since then it has
cut the amount of dollars it offers, to US$40 million in its latest auction
last week from an initial $75 million.

Abyad said the central bank's decrease in the amount of dollars offered is
"due to the decline in their supply of dollars and not because the market
does not need it."

Egypt's foreign reserves fell to $13.6 billion at the end of January — below
the key $15 billion level needed to cover three months of imports. They
stood at $36 billion on the eve of the uprising against Mubarak.

"The outflow of foreign investment and the flight of capital in fear of the
situation in the country is what created the dollar crisis," Abyad added.

Egypt is negotiating a $4.8 billion International Monetary Fund loan but
talks have stalled pending a revision of the country's economic reform
program.

Prime Minister Hesham Qandil said last week the government had finished
revising its program, and hoped the IMF team would return this month to
resume loan talks.

The chief IMF spokesperson said Thursday that he was unaware of the IMF
receiving the revised program.

"[... There are no] clear or specific outlines of where we are going with
the Egyptian economy," Abyad said.