Egypt central bank starts currency auctions, says reserves critical

Updated 30 December 2012
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Egypt central bank starts currency auctions, says reserves critical

CAIRO: Egypt’s central bank introduced a new auction system for buying and selling US dollars to help conserve foreign reserves, which it said had reached a critical level.
Political turmoil over the last month has prompted a rush by investors and ordinary citizens to switch their Egyptian pounds into foreign currency on concerns the government might devalue or bring in capital controls.
The central bank has spent more than $ 20 billion in foreign reserves to support the pound since a popular uprising toppled Hosni Mubarak in early 2011 as turmoil has chased away tourists and foreign investors.
Reserves fell by $ 448 million in November to $ 15.04 billion, enough to cover barely three months of imports, and bankers said the rush to buy dollars was certain to have drained foreign reserves even further in December. The bank is expected to report December figures in the first week of January.
“The current level of foreign currency reserves represents the minimum and critical limit,” the bank said on its website on Saturday.
“This requires their being conserved for critical uses, as represented in fulfilling foreign debt obligations to preserve Egypt’s reputation in international financial markets and to cover imports of strategic commodities,” it added.
The new system will take affect as of Sunday, Dec. 30, and run alongside and not affect the current interbank currency market, the bank said.
It said the auctions would be held regularly and that banks would be asked to submit bids but gave few other details.
Egypt said it would continue to meet instalments and interest payments on its foreign debt and allow transfers by foreigners who had invested on the stock exchange.
The central bank said the banking system’s finances remained “strong and secure” but called on Egyptians to “rationalize their use” of foreign currency and not to speculate.


Financial crime leads to billions of lost business in Middle East, survey finds

Updated 24 May 2018
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Financial crime leads to billions of lost business in Middle East, survey finds

  • Some 45 percent of MENA respondents in Thomson Reuters victims of fraud, corruption and bribery
  • 77 percent of MENA respondents deliberately avoided customers, suppliers, countries or industries viewed as most exposed to financial crime.

LONDON: Middle Eastern companies are losing billions of dollars in business opportunities because of fears about financial crime, according to a Thomson Reuters survey published on Thursday.

Concern about the possibility of severe financial and reputational damage due to regulatory breaches leads foreign investors and firms to shun companies and entire regions where they see “heightened risk.”

In the Middle East and North Africa (MENA), 77 percent of survey respondents said that they deliberately avoided customers, suppliers, countries or industries which they viewed as most exposed to financial crime.

“The impact in terms of lost opportunities at both organizational and national level is difficult to quantify, but likely to impact productivity and economic development,” Thomson Reuters said.

The report was conducted online by an independent third party in March 2018. More than 2,000 senior managers at large global organizations completed the survey, from 19 countries.

In a hard-hitting conclusion, the report said: “For the first time our research has put a price on financial crime: three and a half percent of corporate turnover for the 2,373 large companies in our survey alone. That adds up to a staggering $1.45 trillion.”

Financial crime was said to blight individual lives and undermine the ability of governments to provide key services such as education and health. The IMF has shown that it reduces economic growth and social cohesion.

Che Sidanius, global head of financial crime regulation at Thomson Reuters, said that financial crime caused “incalculable” harm around the world. The proceeds of activities spanning bribery, corruption, fraud, and narcotics trafficking have been implicated in the financing of terrorism, human rights abuses such as slavery and child labor, and environmental crime.

“This has serious economic and social costs in terms of the lost revenues to national exchequers that could be invested in social development, and in terms of the impact on individual lives,” Sidanius said.

Other key findings were that 45 percent of MENA respondents had been a victim of financial crime as opposed to 47 percent globally; 96 percent believed that bribery and corruption was an important issue to tackle; 57 percent indicated that the consequences of bribery and corruption meant less government revenue; only 59 percent said that they fully conducted due diligence; and only 60 percent fully conducted due diligence, the report said.