In the meeting held Saturday by the Central Bank’s (CBE) board and attended by commercial banks’ chairpersons, CBE launched a new mechanism to avoid the depletion of its foreign reserves.
The new mechanism is an auction for buying and selling US Dollars that will enter into force Sunday the 30th of October, according to the press release issued by the CBE following the meeting.
The statement said the county’s international reserves had reached their minimum levels required to preserve its capacity to meet the “inevitable” uses: paying external debts, financing strategic goods supply (food and oil), and emergency management.
The bank listed the foreign currencies’ usages since the beginning of 2012: $14mn to import food and petrol products, $18bn to pay foreign debts and $13bn to cover foreign investors’ exit.
The Central Bank reaffirmed its commitment to pay the instalments and interest of foreign debts and to guarantee the transfer of foreign investor’s product to achieve maximum flexibility in the stock market.
The statements called upon the Egyptian people to rationalise their foreign currencies usage and to encourage local industries to pass the critical situation.
“The foreign reserves level is safe till now, but it will not be next month” said Samir Radwan, the former finance minister, noting that each month costs Egypt another $1bn of foreign reserves.
“The Central Bank has done all what is there to be done in order to preserve the foreign reserves, the only solution now is getting the economy back to work,” added the former minister.
The market stabilising techniques are required, but not enough to change the supply and demand balance, as commented Hazem El-Beblawi the former finance and deputy prime minister, “at the end, they are the market powers who control everything, but the good day to day management is required ” he explained, “a lot of foreign exchange fluctuations happen because of market bottlenecks or lack of precise information and not for real reasons.”
Radwan described the Central Bank’s management as rational and trustworthy, according to him, it succeeded in achieving stability in the market.