Egypt's January foreign currency reserves drop

Egypt's net foreign currency reserves dropped to $33.4 billion (Dh125.7bn) in January from $34.1bn in December, according to a statement on the Central Bank of Egypt's website yesterday.

Egypt's reserves have been in decline since October 2008 after rising steadily since August 2004.

"With the lower capital inflows, foreigners exiting the stock exchange and fixed income markets, the current account deficit materialising and financial markets abroad showing poorer performance, net international reserves have been moving down since October, declining by $1.6bn during the November-January period," Beltone Financial analysts said in a research note.

"We expect that, as the deterioration in the exports and foreigners' exit of the stock market decelerate, the decline in the net international reserves will stabilise, dropping at a slower pace than the pace seen in the past few months," the analysts added.

Meanwhile, Egyptian Central Bank Governor Farouk Al Okdah said the rate of inflation will slow to 10 per cent by June, making it easier to use monetary policy to stimulate economic growth.

The inflation rate has been hovering around 22 per cent in recent months, curbing the bank's ability to cut rates for fear of inncreasing prices, Al Okdah said.

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