Thursday, 10 November 2011 20:32
CAIRO: The Egyptian pound fell to its lowest in nearly seven years against the US dollar on Thursday, driven by a weak euro and outflows as local treasury bills matured, traders said.
Traders said they were on look out for any sign of intervention by the central bank, which has not allowed the pound to breach 6 to the dollar despite a collapse in demand for the currency after a popular uprising earlier this year.
The uprising devastated tourism and foreign investment, two of Egypt's main sources of foreign exchange. The pound traded as low as 5.985 to the dollar, it’s weakest since Jan. 4, 2005, and down from 5.968 at Wednesday's close. Later on Thursday it regained some of its lost ground, strengthening to 5.9715 to the dollar.
"There has been some outflow from T-bill maturities," said a Cairo-based currency trader. According to central bank statistics, foreign holdings of Egyptian T-bills fell to 17.07 billion Egyptian pounds ($2.6 billion) from 59.35 billion before the uprising.
The trader said there had been no sign of a dollar inflow to help strengthen the pound later in the session and speculated that some banks may have been taking profits on their long positions against the dollar.
He did not rule out a possible indirect intervention by the central bank, which bankers say often sells dollars through local banks to support the pound.
Another trader said the pound was pushed lower by a weak euro, which traded at a one-month low against the dollar on Thursday on concern that Italy's increasing borrowing costs might lead to a further deepening of the euro zone debt crisis.
He said trading volume in the pound, at $200-250 million during the day, was within its normal range.
Copyright Reuters, 2011