Pound weakens as Cairo says no to aid

Egypt's pound weakened to its lowest since mid-April after the government said it had no need for a previously arranged $3 billion (Dh11 billion) financing deal from the International Monetary Fund or $1 billion in budget support proposed by the World Bank. The pound currently stands at 5.9590 to the dollar after touching 5.9620, its weakest since April 14. "Foreigners definitely see it as a bad move for the government to turn down this aid," said a Forex trader in Cairo. "We started to see them selling pounds last week after the government revised its budget, and now some locals are selling too." Traders said demand for the dollar has further strengthened as foreigners reduce holdings of Egyptian equities following dividend payments and exit some maturing T-bills. They said speculators could enter the market if the pound's weakness continued. "But I don't think the weakness will last long as we are approaching levels where the central bank has intervened before," said the first trader. The central bank has drawn down official and unofficial reserves by more than $15 billion since the popular uprising that unseated President Hosni Mubarak erupted in January. Analysts say the bank has drawing down reserves to support the pound. From / Gulf News