EGYPT's Net International Reserves (NIR) reversed their two-month upward trend and returned to the red in June. Shedding $1.12 billion, the NIR ended the month at $14.9 billion, according to Central Bank of Egypt (CBE) figures. While the breakdown of the figures is not yet available, “the losses in the reserves are mainly attributable to the absence of external aid during the month of June, the increased weakening in the balance of payment fundamentals in anticipation of the planned protests for 30 June, and the CBE's revaluation of monetary gold holdings, which most likely have been revalued downwards as gold prices fell from their June 2012 levels,” said a research note by local investment bank Beltone. The value of the country's gold reserves declined almost 25.4 per cent to reach $2.46 billion on the back of the significant decline in the price of gold on the international commodity markets. Egypt's NIR headed upwards during April and May thanks to external aid from Qatar and Libya in addition to lower imports. However, despite continued import rationing, “aid was absent during June 2013, with increased low performance of other foreign-exchange earners such as tourism and investment inflows on the back of a number of political events such as the controversial appointment of the governor of Luxor, a weak speech by ousted president Mohamed Morsi, and mass protests leading up to 30 June,” noted Beltone. The reserves now cover 3.8 months of imports. Experts believe that the situation is unlikely to improve in July, when semi-annual loan servicing payments to the Paris Club are due. Egypt will have to pay $650 million on this occasion, which will further pressure the reserves. However, Prime Group, a local investment bank, said it expected promises by Saudi Arabia and the United Arab Emirates to help Egypt deal with its immediate need for foreign currency through grants and loans, always assuming that these in fact materialise. It was reported on Tuesday that a ministerial delegation from the UAE was due in Egypt early this week. The UAE was among the first Gulf countries to congratulate Egypt in the wake of last week's ouster of Islamist former president Morsi. In 2011, the UAE pledged $3 billion in aid to Egypt, but the money was never delivered. The country's NIR have lost almost two-thirds of their value since January 2011, when they stood at $36 billion. The drainage of reserves came as the Central Bank kept withdrawing from it to support the Egyptian pound. The pound lost 9.3 per cent since the beginning of 2013. However it stabilised last week shrugging of fears of violence in the streets. The pound gained 0.1 per cent on Monday to close at LE7.04 for the dollar compared to LE7.05 on last Sunday.
