Egypt Signals Currency Policy Shift With Payment of Foreign Dues

Egypt’s new central-bank Governor Tarek Amer sought to restore investor confidence battered by five years of political unrest by paying foreign investors the money owed to them in the aftermath of the 2011 uprising.

The central bank said Tuesday it paid $547.2 million, clearing the backlog of funds that it hadn’t allowed sellers of stocks and bonds to convert into foreign exchange earlier. While that immediately eases the dollar crunch, the move by Amer in the first week of his tenure also signals he’s readying for a more liberal currency policy, the investment-banking unit of the country’s biggest listed lender said.

“It definitely signals more liberal foreign-exchange management in Egypt,” said Hany Farahat, a Cairo-based senior economist at CI Capital Holding, a subsidiary of Commercial International Bank Egypt SAE. “It’s a significant positive catalyst, after a few months of none.”

The Egyptian pound is under pressure as foreign reserves tumbled to less than half of their level prior to the so-called Arab Spring, while tourism is struggling to recover in the wake of the bombing of a Russian passenger jet in October. Signs that Egypt may no longer restrict the repatriation of investment flows may boost the appeal of the country’s assets, Farahat said.