CAIRO Dec 29 Egypt's central bank introduced a
new auction system for buying and selling U.S. dollars to help
conserve foreign reserves, which it said had reached a critical
Political turmoil over the last month has prompted a rush by
investors and ordinary citizens to switch their Egyptian pounds
into foreign currency on concerns the government might devalue
or bring in capital controls.
The central bank has spent more than $20 billion in foreign
reserves to support the pound since a popular uprising toppled
Hosni Mubarak in early 2011 as turmoil has chased away tourists
and foreign investors.
Reserves fell by $448 million in November to $15.04 billion,
enough to cover barely three months of imports, and bankers said
the rush to buy dollars was certain to have drained foreign
reserves even further in December. The bank is expected to
report December figures in the first week of January.
"The current level of foreign currency reserves represents
the minimum and critical limit," the bank said on its website on
"This requires their being conserved for critical uses, as
represented in fulfilling foreign debt obligations to preserve
Egypt's reputation in international financial markets and to
cover imports of strategic commodities," it added.
The new system will take affect as of Sunday, Dec. 30, and
run alongside and not affect the current interbank currency
market, the bank said.
It said the auctions would be held regularly and that banks
would be asked to submit bids but gave few other details.
Egypt said it would continue to meet instalments and
interest payments on its foreign debt and allow transfers by
foreigners who had invested on the stock exchange.
The central bank said the banking system's finances remained
"strong and secure" but called on Egyptians to "rationalise
their use" of foreign currency and not to speculate.