Jan 31, 2011
From Al-Jazeera, a quick update on the cash situation in Egypt.
Not surprisingly, ATMs have apparently run out of cash — no doubt fueled by aggressive withdrawals and the inability to refill them.
And the network also cites currency traders who say that up to $500 million per day is being withdrawn from the country.
In terms of how much cash there is in Egypt, Citi reported this last Thursday:
In fact, there is an argument that the ministry of finance and the Central Bank of Egypt (CBE) will not be too bothered if portfolio investors choose not to roll over their holdings of T-Bills in the coming months. As with many emerging market authorities during 2010, they were instead more concerned about the complete opposite, a rising level of foreign ownership of T-bills, which peaked at US$11.3bn, or 23.7% of the outstanding stock in October 2010, and the potential pressure for exchange rate appreciation that this created.
In fact, we think that they would probably be quite happy to let foreign ownership fall to somewhere in the 5-10% range of the outstanding stock. While such an outflow is clearly large, it is likely to have minimal impact on the exchange rate, unless the CBE wants it to allow it. The CBE has built up net foreign assets at the commercial banks, sometimes referred to as Tier II reserves in Egypt, to US$21.1bn at the end of October 2010 on the back of its past inflows. This should now flow out, without it even having to touch official reserves, which stood at US$36bn at the end of 2010.
This article was posted: Monday, January 31, 2011 at 5:21 am