Egypt sells $600 million to import basic goods

Sun Apr 14, 2013 4:49pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Ulf Laessing and Asma Alsharif

CAIRO (Reuters) - Egypt's central bank sold $600 million to banks in a special auction of foreign exchange on Sunday to pay for wheat, meat, cooking oil and other essential imports to a country struggling with a currency crisis.

The size of the auction - 15 times the amount the central bank has been selling at its regular currency auctions - showed the extent of pent up demand for dollars as Egypt struggles with an economic crisis two years after the ousting of Hosni Mubarak.

The central bank has been rationing dollars since late December in a system of regular foreign currency auctions brought in to cope with the impact of a run on the pound.

Foreign exchange dealers said the authorities would have to use more dollar reserves to guarantee food supplies. Food price inflation has stoked unrest in the past.

"The effect will be temporary because the demand is a lot higher than this. They must do it again but it is not clear when that will be," said a currency dealer, asking not to be named.

Prime Minister Hisham Kandil said Sunday that the government was looking for ways to stabilize prices of key goods and to ensure the flow of goods into the local market.

He said in comments carried by state news agency MENA that the unspecified measures were needed to stabilize prices in the coming period in the face of possible price hikes.

The hard currency was sold at 6.87 pounds to the dollar - near the official rate. The pound is trading much weaker on the black market where most private sector importers are having to source their hard currency needs.   Continued...

People and vehicles are seen caught in a traffic jam in front of the Central Bank of Egypt's headquarters in downtown Cairo March 17, 2013. REUTERS/Amr Abdallah Dalsh