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Egypt’s banks attract $9bn in inflows since pound float

Pedestrians walk past an advertisement displaying a large dollar sign and U.S. dollar banknotes outside a bank in Cairo, Egypt, on Friday, Aug. 7, 2015. The Suez canal extension and other construction projects have boosted the economy, which grew above 4 percent in the nine months to March for the first time since 2010. Photographer: Shawn Baldwin/Bloomberg



Foreign holdings of Egyptian treasury bills have grown since the pound was floated three month ago, while renewed trust in the currency has sent billions of dollars into local banks.
Foreigners held 10.2 billion pounds ($540 million) worth of T-bills in December, state-run news agency MENA reported, citing central bank data and without specifying how much of that sum came from new inflows. That’s more than 10 times the 989 million pounds of foreign holdings reported in October, though still a fraction of the 60 billion pounds held before the 2011 uprising against then-President Hosni Mubarak.
Meanwhile, the central bank said commercial lenders were able to attract $9 billion since the float, largely from households and private businesses selling foreign currency and remittances from abroad.
“Trust in the system is growing,” Assistant Sub Governor Rami Aboul Naga told Bloomberg News late on Tuesday. “We have seen a notable improvement in foreign currency inflows to banks over the past few weeks.”
The central bank said on Nov. 3 it was abandoning all currency controls in an effort to ease a dollar shortage that crippled economic activity, paving the way for Egypt to secure a $12 billion International Monetary Fund loan. The dollar traded at as much as a 100 percent premium to the official exchange rate on the black market before the decision.
Egypt has created a “well-functioning” currency market that is reflected in the pound’s exchange rate, the IMF said last month, adding that the currency may strengthen after a period of “overshooting.” The pound has weakened by more than 50 percent since the float and was trading at 18.725 per dollar at 9:07 a.m. on Wednesday, according to data compiled by Bloomberg. Stocks have since surged by more than 40 percent.
“The diversity of sources of inflows from remittances, individuals, investments is a major indicator of the success of the new system,” said Reham ElDesoki, senior economist at Dubai-based investment bank Arqaam Capital. “Now there is a gradual erosion of the foreign currency backlog. Once this happens, the pound will start strengthening and the black market will completely disappear,” she said.

CIB to issue dividend of 0.5 Egyptian pounds per share

CAIRO / Reuters

The board of Egypt’s Commercial International Bank (CIB) recommended a cash dividend of 0.50 Egyptian pounds per share, it said on Wednesday after reporting a 27 percent rise in net income for 2016.
The CIB board also approved a Tier 2 capital loan of up to $300 million, the bank said in a bourse statement, adding that the float of the Egyptian pound Nov. 3 had resulted in a fall in the value of its assets and commitments in foreign currencies amounting to 325 million pounds.
Egypt’s largest listed company said despite tougher regulation and challenging economic conditions its full-year consolidated revenue hit a record 11.3 billion Egyptian pounds.
The company had reported a 34.8 percent rise in its fourth quarter net income to 1.55 billion pounds and a 27 percent increase in its annual net income for 2016 to 6 billion pounds, it said in a statement late on Tuesday.
Egypt faces a foreign currency shortage since a popular uprising in 2011 drove away its key sources of foreign currency, tourists and foreign investors. The central bank had been keeping the pound artificially strong at 8.8 per dollar and had been rationing its reserves, prioritizing the imports of essential goods.

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