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UPDATE 1-Egypt's net foreign reserves rise to $19.592 bln at end-Sept -central bank
October 3, 2016 / 1:21 PM / a year ago

UPDATE 1-Egypt's net foreign reserves rise to $19.592 bln at end-Sept -central bank

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CAIRO, Oct 3 (Reuters) - Egypt’s net foreign reserves rose to $19.592 billion at the end of September, jumping from $16.564 billion at the end of the previous month, the central bank said on Monday.

Egypt had roughly $36 billion in reserves before its 2011 uprising ushered in a period of political turmoil, scaring off tourists and foreign investors, key sources of hard currency.

The International Monetary Fund last month agreed in principle to grant Egypt a $12 billion three-year facility to support a government reform programme aimed at reducing the budget deficit. Board-level approval depends on the government securing $5-$6 billion in bilateral financing in the first year.

The central bank did not immediately explain the jump in reserves, but Egypt last month received the first $1 billion tranche of a $3 billion World Bank loan aimed at supporting the government’s reform programme and finances.

The United Arab Emirates also agreed in August to provide Egypt’s central bank with a $1 billion deposit for six years, while the government is in advanced talks with Saudi Arabia to secure a new deposit worth $2-3 billion that would go towards that requirement.

Egypt’s central bank governor has previously said that he would consider floating the pound, which is currently managed within a tight band to the dollar, should net foreign reserves exceed $25 billion.

Speculation is rife in Egypt that the central bank could devalue the currency any day in an effort to close the gap between the official exchange rate of about 8.8 pounds to the dollar and the black market rate that has fluctuated at levels weaker than 13 pounds in recent weeks.

An acute shortage of hard currency has hit business and discouraged investment in the past two years as companies have struggled to pay for imports and repatriate profit. (Reporting by Lin Noueihed, editing by Larry King and Dominic Evans)

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