Egyptians Line Up For Cash As Banks Open, Currency Plummets To 2005 Low

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Hundreds of Egyptians queued outside banks to withdraw funds as lenders opened for the first time in more than a week amid protests demanding the ouster of President Hosni Mubarak. The pound dropped to the lowest level since 2005.

The central bank moved 5 billion pounds ($854 million) of cash into the financial system as depositors gained access to their savings. The regulator, which has $36 billion in reserves and guarantees deposits, used military cargo planes to bring in the funds, Governor Farouk El-Okdah said yesterday on state-run television.

The demonstrations, which left at least 300 people dead according to the United Nations, roiled financial markets worldwide and sent yields on Egyptian bonds higher. The stock market remained closed for a sixth day after the benchmark EGX 30 Index tumbled 16 percent in the week to Jan. 27.

The pound weakened 1.3 percent to 5.9327 against the U.S. dollar, the lowest level since January 2005, at 1:56 p.m. in Cairo, from 5.857, according to data compiled by Bloomberg News.

The central bank published on its website a list of more than 200 bank branches resuming operations today between 10:00 a.m. and 1:30 p.m. Customers are allowed to withdraw up to 50,000 Egyptian pounds and $10,000 a day.

The government plans to sell 15 billion pounds in treasury bills tomorrow after canceling last week’s auction as protests against Mubarak intensified. Yields on Egypt’s bills may surge about 30 percent, said Shahinaz Foda, the head of treasury at BNP Paribas Egypt. Credit Agricole CIB expects the pound to slump 20 percent in the “short term.” The currency’s three- month non-deliverable forwards rose to a record last week, suggesting the currency may fall more than 7 percent against the dollar.

The finance ministry plans to hold a meeting with the central bank and primary dealers and will issue a statement later today, Sami Khallaf, the finance minister’s public debt adviser said in a telephone interview last week. Egypt’s stock exchange will remain shut until at least Feb. 8, communications manager Hisham Turk said in a telephone interview today.

(Source: Bloomberg)