Egypt slaps new controls on traveling with cash

Updated 25 December 2012
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Egypt slaps new controls on traveling with cash

CAIRO: Egypt has banned travelers from carrying more than $10,000 in foreign currency in or out of the country, as officials worry over pressure on its pound currency and a rush by Egyptians to withdraw their savings from banks.
Political turmoil over the past month has raised fears among ordinary citizens and investors that the government - which has pushed back talks to seal IMF funding till January - may not be able to get its fragile finances under control.
The central bank has spent more than $ 20 billion of its foreign reserves to support the pound since the popular uprising that toppled Hosni Mubarak in early 2011. It now has only $ 15 billion, equal to only about three months of imports cover.
The uprising drove away tourists and foreign investors alike, freezing growth, pushing the state budget deficit into double digits as a percentage of national output and worsening its balance of payments.
On Monday, Standard & Poors' cut Egypt's long-term credit rating and said another downgrade was possible if deepening political turbulence undermined efforts to prop up the economy and public finances.
Presidential spokesman Yasser Ali yesterday confirmed the new government currency restriction, which includes US dollars or their equivalent in other foreign currencies. The decision also forbids sending cash through the mail.
The decision prohibits all travelers from "bringing foreign currency into the country or carrying it out to only $10,000".
Any funds over $ 10,000 must be transferred electronically, Ali added.
Previously, travelers were simply required to declare any amounts above $ 10,000 to authorities on their way in or out.
The central bank has already limited Egyptians from transferring more than a cumulative $100,000 out of the country since the uprising nearly two years ago unless they can demonstrate a pressing need for the funds.
Many wealthier Egyptians have reached their limit and are no longer able to send funds abroad.
The crisis has complicated a $ 4.8 billion loan the government is seeking from the International Monetary Fund.
The IMF had been due to approve the loan on Dec. 19, but the government asked for a delay after it cancelled a series of unpopular austerity measures deemed essential for its approval.
Bankers said depositors had been withdrawing greater amounts of cash from their accounts since President Muhammad Mursi issued a constitutional declaration last month that expanded his powers and threw the country into political crisis.
The constitutional declaration has led to occasional street battles between supporters and opponents of Mursi.
"Since the clashes on Nov. 28 and after the announcement that the IMF loan was delayed for a month some dollarization started to take place, mainly through cash transactions," said an official at the treasury of a Cairo-based bank.
Depositors have also been spooked by an unexpected weakening of the Egyptian pound, which the central bank has allowed to fall by about 1 percent over the last month, he added.
Seeking to quell what it called these "public rumors", the central bank on Monday said it was taking all steps needed to safeguard deposits in Egyptian banks whether denominated in local or foreign currencies.
Ayman Osama, father of two young children, said he withdrew the equivalent of $ 16,000 from his account this week and planned to withdraw more in the coming days.
"I have been hearing that the central bank is going to take over all our bank deposits to pay wages for government employees given the current deteriorating economic situation," he said. "I am not going to put any more money in the bank and neither will many of the people I know."
One Egyptian who wanted to buy $ 10,000 last week said he had to go to many currency exchange shops before he could find sufficient dollars because most shops had run out.
Bankers said the rush had left banks and money changers short of dollars, but that more bank notes had been ordered from abroad.
"We are having a shortage of dollars these last few days. It therefore may be difficult to pull out money. But the shortage should be solved in a week," an official at one Cairo bank told Reuters.
In a note published last week, EFG Hermes economist Mohamed Abu Basha lowered his forecast for the currency to 6.60 pounds to the US dollar by the end of 2013 from an earlier forecast of 6.40 pounds.
"An extensive delay in the IMF deal will definitely lead to disorderly devaluation, which is likely to take the USD-EGP up to 7.0 pounds, where dollarization would be the crack to the system," Abu Basha wrote.


Asia’s refining profits slump as Mideast exports surge

Updated 23 February 2019
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Asia’s refining profits slump as Mideast exports surge

  • Since 2006, the Asia-Pacific has been the world’s biggest oil-consuming region, led by industrial users South Korea and Japan along with rising powerhouses China and India
  • However, overbuilding of refineries and sluggish demand growth have caused a jump in fuel exports from these demand hubs

SINGAPORE: Asia’s biggest oil consumers are flooding the region with fuel as refining output is exceeding consumption amid a slowdown in demand growth, pressuring industry profits.
Since 2006, the Asia-Pacific has been the world’s biggest oil-consuming region, led by industrial users South Korea and Japan along with rising powerhouses China and India.
Yet overbuilding of refineries and sluggish demand growth have caused a jump in fuel exports from these demand hubs.
Compounding the supply overhang, fuel exports from the Middle East, which BP data shows added more than 1 million barrels per day (bpd) of refining capacity from 2013 to 2017, have doubled since 2014 to around 55 million tons, according to Refinitiv.
Car sales in China, the world’s second-biggest oil user, fell for the first time on record last year, and early 2019 sales also remain weak, suggesting a slowdown in gasoline demand.
For diesel, China National Petroleum Corp. in January said that it expected demand to fall by 1.1 percent in 2019. That would be China’s first annual demand decline for a major fuel since its industrial ascent started in 1990.
The surge in fuel exports combined with a 25 percent jump in crude oil prices so far this year has collapsed Singapore refinery margins, the Asian benchmark, from more than $11 per barrel in mid-2017 to just over $2.
Combine the slumping margins with labor costs and taxes and many Asian refineries now struggle to make money.
The squeezed margins have pummelled the stocks of most major Asian petroleum companies, such as Japan’s refiners JXTG Holdings Inc. or Idemitsu Kosan, South Korea’s top oil processor SK Innovation, Asia’s top oil refiner China Petroleum & Chemical Corp. and Indian Oil Corp., with some companies dropping by about 40 percent over the past year. Jeff Brown, president of energy consultancy FGE, said the surge in exports and resulting oversupply were a “big problem” for the industry.
“The pressure on refinery margins is a case of death by a thousand cuts ... Refinery upgrades throughout the region are bumping up against softening demand growth,” he said.
The profit slump follows a surge in fuel exports from China, India, Japan, South Korea and Taiwan. Refinitiv shipping data shows fuel exports from those countries have risen threefold since 2014, to a record of around 15 million tons in January.
The biggest jump in exports has come from China, where refiners are selling off record amounts of excess fuel into Asia.
“There is a risk for Asian market turmoil if (China’s fuel) export capacity remains at the current level or grows further,” said Noriaki Sakai, chief executive officer at Idemitsu Kosan during a news conference last week.
But Japanese and South Korean fuel exports have also risen as demand at home falls amid mature industry and a shrinking population. Japan’s 2019 oil demand will drop by 0.1 percent from 2018, while South Korea’s will remain flat, according to forecasts from Energy Aspects.
In Japan, oil imports have been falling steadily for years, yet its refiners produce more fuel than its industry can absorb. The situation is similar in South Korea, the world’s fifth-biggest refiner by capacity, according to data from BP.
Cho Sang-bum, an official at the Korea Petroleum Association, which represents South Korean refiners, said the surging exports had “triggered a gasoline glut.”
That glut caused negative gasoline margins in January.