CAIRO: The Egyptian pound stabilized on Tuesday as the Central Bank apparently acted to support it, after the currency fell to a six-year low on Monday in response to the political turmoil in Tunisia, Reuters news agencies quoted traders as saying. The pound strengthened marginally to close at 5.8220 against the dollar from Monday's finish of 5.8240. At the end of last week, the Egyptian currency was trading around 5.8000. Currency traders said that with Egyptian share prices declining, it was almost certain that the Central Bank was selling dollars to support the currency after Monday's decline. Dealers say the Central Bank rarely intervenes directly, but often buys and sells the currency indirectly by way of one or two local banks. “On a day like today where the stock market went down 3.14 percent you would have totally seen an outflow, and the currency appreciated, so it's clear the Central Bank intervened selling dollars,” said one dealer. Tuesday's decline in Egypt's benchmark stock index .EGX30 was the biggest drop in eight months and followed a 2.4 percent slide on Monday, as investors worried that Tunisia's political instability might eventually spread to Egypt or other countries in North Africa. Economists said the central bank was likely to use its unofficial reserves to ensure that any weakening of the pound was gradual, so that Egyptian depositors did not take fright and shift large amounts of their cash into dollars. BM
