Egypt pound falls to five-year low against dollar
The pound has been volatile for weeks.
November 29, 2010 4:08 by Reuters
The Egyptian pound fell to its lowest against the dollar since July 2005 on Monday, weakened by demand for dollars by Egyptian importers, dealers said.
The pound has been volatile for weeks, largely on concerns over risky emerging market assets and a lack of central bank support, analysts say.
The pound touched 5.786 on Monday against the U.S. currency, breaching an earlier low of 5.777 reached in early November.
“There is lots of demand for dollars, mainly from corporates for real corporate needs,” said a forex dealer at a bank in Cairo. “They are seeking dollars for imports.”
Another dealer said the Egyptian currency probably began weakening at first because foreign investors were not buying, and once it fell below the 5.78 barrier its decline accelerated.
“It is probably because of a fall in foreigners buying the market,” the dealer said. “It was pretty calm early in the session, but later on trade got very aggressive.”
He said the pound has previously met support at the 5.78 level.
Another trader said there was real demand for dollars by Egyptian companies.
Egypt’s nation-wide elections for a new parliament passed on Sunday without major violence, but traders said this did not appear to be factor in the pound’s movement.
“The central bank has enough reserves to intervene” if it wants to, a trader said.
(Reporting by Patrick Werr; Editing by Toby Chopra)