Egyptian pound falls further despite currency intervention

Trader An Egyptian trader at the Cairo stock exchange watches market movements

The Egyptian pound has fallen further against the US dollar, despite efforts by the country's financial authorities to halt its slide on the money markets.

The renewed decline came as the central bank held the second in a series of currency auctions.

It sold $74.8m at a cut-off price of 6.3050 Egyptian pounds to the dollar, less than the equivalent price of 6.2425 in Sunday's first auction.

However, President Mohammed Morsi has said he is unconcerned at the fall.

The auctions are aimed at rationing the availability of dollars, in a first step towards allowing the Egyptian pound to float freely.

In other measures, the central bank has also said corporate clients cannot withdraw more than $30,000 in cash per day and announced it will charge individuals who buy foreign currencies an administrative fee of 1% to 2%.

Loan talks

Egypt is grappling with a crippling budget deficit and dwindling foreign reserves, which the central bank says have dropped to "critical" levels.

The central bank has spent more than $20bn of foreign reserves to support the pound since a revolution against former President Hosni Mubarak in 2011.

The current President, Mohammed Morsi, told Arab journalists on Sunday that the currency's fall in value did not scare the government and that the situation would stabilise "within days".

Also on Sunday, Prime Minister Hisham Qandil said Egypt would soon resume talks with the International Monetary Fund over a crucial $4.8bn (£3bn) loan to shore up the economy.

The talks had been suspended because of political turmoil over a new constitution, which was approved by a referendum last week.

"We hope that there will not be any fundamental changes in our plan with the IMF because we will summon them in January so we resume discussions to go forward in the matter of the loan," Mr Qandil said.

In unofficial trading on Sunday, the Egyptian pound hit a new low on Sunday of about 6.30 to the US dollar, dealers told Reuters. The previous low for the pound was in October 2004 and was about 6.26 to the dollar.

The central bank's dollar reserves stood at about $15bn at the end of November.

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