Pound losing more ground THE POUND continued its slide against the dollar to reach an exchange rate of LE6.56 in banks on Tuesday, continuing its losses since the Central Bank of Egypt (CBE) introduced a forex auctions system 30 December, down 5.7 per cent. This comes as the CBE decided to reduce the number of dollar auctions this week from five to three, aiming at slowing the pace of the pound's depreciation before the resumption of loan talks with the International Monetary Fund (IMF) expected by the end of this month. Political strife ignited early December by the passage of a controversial constitution increased uncertainty and triggered a rush to buy dollars, sending its price to record highs and draining foreign reserves to a critical level. The CBE sold $520 million to banks during the first two weeks of the new auction system. Through the auction system, the CBE limits the amount of dollars that each bank can purchase to conserve foreign reserves. For their part, public banks started to withdraw dollars from deposits with foreign banks in order to cover the increased demand on the greenback. Some bankers put the value of withdrawals since 30 December at $1 billion. The IMF loan and associated international financing are needed to support Egypt's foreign reserves, losing almost 60 per cent of its value since the 2011 revolution, and eventually to back up the pound. Net international reserves were little changed in December at $15 billion even after Qatar said last week it doubled a deposit at the CBE to $4 billion. Ramez to head CBE AFTER weeks of denials that Farouk Al-Okda, CBE governor, is leaving, President Mohamed Morsi last Thursday named Hisham Ramez, vice chairman and CEO of the Commercial International Bank (CIB), Egypt's largest publicly traded bank, as the new CBE head after accepting the resignation of Al-Okda. Being a former deputy central banker to Al-Okda, Ramez is expected to adopt the same monetary policy as his predecessor. Since his appointment in 2003, Al-Okda has attempted to shore up the Egyptian pound against foreign currencies by tightening restrictions on speculation. During a press conference held last week, Ramez asserted that Egypt's ongoing currency problem should not be cause for serious concern, saying that Egypt's banking authority was able to control it. “The matter is not out of control. On the contrary, at any time we can control it. The Central Bank has all the tools to enable it to intervene at anytime it feels there is speculation or anything against the market.” Ramez is slated to assume his duties 3 February, heading the same current six-member board of directors. DHL invests LE500 million in Egypt DHL EXPRESS Egypt, a market specialist in express mail and logistics in the Middle East, signed a memorandum of understanding with Cairo Airport Cargo Company to establish its biggest logistics hub in Africa in the new Cargo Village at Cairo International Airport. The new DHL facility, with an estimated cost of LE500 million, will be the MENA hub for consolidating, sorting and re-exporting shipments coming from Europe, a company press release quoted its country manager Amr Tantawi as saying. Tantawi stressed that improving transport infrastructure is a prerequisite for the development of Egypt's logistics sector, boosting its position as a competitor to the global logistics hubs of Dubai and Hong Kong. More efficient bread subsidy A NEW system for producing the subsidised baladi (popular) bread is soon to be applied in Kafr Al-Sheikh governorate. According to Saad Al-Husseini, Kafr Al-Sheikh governor, a bag of flour that produces 1,060 loaves of bread will be delivered to bakeries at the market price of LE282. This means that each loaf will cost LE0.26. But it will continue to be sold at LE0.05. The government will cover the difference in addition to LE80 for each bag of flour to cover the cost of production. Some 513 bakeries in the governorate have agreed to participate in the new system and contracts will soon be signed with each bakery. The new system is expected to put an end to the sale of subsidised flour on the black market. A bag of flour is currently sold for LE16 to bakeries, which means huge profits for the black market. This system was successfully applied in Port Said. Bread subsidy costs the country's budget amount to LE16 billion annually. Increasing sugar cane prices OSAMA Saleh, minister of investment, has decided to raise sugar cane ex-factory prices in affiliated public sector companies from LE325 to LE360 per tonne. The new price, effective 1 January, according to Saleh, will encourage farmers to cultivate the strategic product. The decision was taken in response to a farmers' demonstration last week in front of the Armant Sugar Factory in the Upper EgyptLuxor governorate protesting against the government's failure to implement their longstanding demand to increase sugar cane prices to LE400 per tonne. Farmers complained that the per-tonne price of LE325 at which farmers sell sugar cane to sugar-processing factories does not cover costs. Higher exports EGYPT's exports increased five per cent in December to reach LE11.8 billion, pushing overall exports for the year 2012 to LE132 billion, two per cent higher than 2011. This surpasses the government's targeted exports figure of LE130 billion for 2012. According to a press release issued by the Ministry of Industry and Foreign Trade, furniture and pharmaceuticals were the top sectors, witnessing a significant increase in exports through 2012 compared to 2011, mounting to LE2 billion and LE2.6 billion respectively. On the other hand, exports of ready-made garments slumped by seven per cent, recording LE8.5 billion. Likewise, food exports declined from LE17 billion in 2011 to LE16.4 billion in 2012. Saudi Arabia and Libya topped the list of importers from Egypt last year, with their imports registering LE11.8 billion and LE9 billion respectively. For non-Arab countries, Egyptian exports declined, with exports to the US going down from LE9.1 billion in 2011 to LE8.8 billion in 2012. Exports to Italy also tumbled by 14 per cent, recording some LE7.1 billion. Turkey lifts tariffs TURKEY has cancelled protective tariffs on its cotton yarn imports from Egypt and other countries. Hatem Saleh, minister of industry and foreign trade, said the decision, effective 1 January, represented a “great opportunity” for Egypt to increase exports of thin yarn while thicker yarn would still face severe competition from India and Pakistan due to recent decreases in cotton prices in those countries. Saleh added that the Turkish decision effectively put an end to the quota system that had previously regulated Egyptian exports to the Turkish market. According to Ministry of Industry and Trade figures, Egyptian yarn exports to Turkey from 2007 to 2011 amounted to 7,790 tonnes, worth some $66.2 million, 51 per cent of which were imported under the quota system.
