Wednesday, February 08, 2012

The upcoming financial panic in Egypt

Egypt's foreign reserve hits $16.4 billion in January down from 18.1 last December. Check out the money flights last December(" $651 million of its external debt to creditors and $625 million was “repatriated by foreign investors”") February will be worse especially after the massacre of Port Said and the killings in Cairo.

"Twelve-month non- deliverable forwards for the pound were at 7.2 a dollar, reflecting expectations for the currency to decline 16 percent of its value over that period." Bloomberg

I wonder where the red line where capital flights accelerates (11 billion? 9 billions?); charging 42 employees of US based NGOs with criminal charges won't help Egypt's case either.

If the parliament worries about "foreign funding to destabilize Egypt", wait until foreign funding dries up and we'll witness what destabilization looks like. The cost of wheat imports are getting higher as well.

I wonder if Egypt will take loan from IMF (which usually comes with nasty conditions) - I also wonder if the government will impose currency control if panic sets in once the reserve red line got crossed.

1 comment:

Redneck Texan said...

How did Mubarak manage to build up Egypt's Foreign Reserves?