CAIRO, June 13 The Egyptian pound weakened on
the black market and the country's debt insurance costs hit
their highest level since October 2008 as investors grow rattled
by Egypt's deteriorating economic indicators.
The pound, which has lost 11 percent of its value since
December, inched slightly lower at a central bank foreign
Egypt has been facing growing fuel shortages, a widening
budget deficit and calls for countrywide anti-government
protests on June 30, the first anniversary of Mohamed Mursi's
election as president.
On Wednesday, MSCI raised concerns about getting money out
of Egypt, prompting the stock market's benchmark
index to tumble 5.2 percent to its lowest close since
the election of Mursi, candidate of the Muslim Brotherhood.
It regained some of that on Thursday, rising 1.2 percent.
Thursday's rise in Egyptian debt insurance costs - which hit
the highest level since October 2008, soon after the collapse of
Lehman Brothers - happened against the background of a broad
sell-off in emerging markets and local political concerns.
Five-year credit default swaps rose to 750 basis points on
Thursday. In the weeks before Mursi was elected in June 2012
they had reached a peak of 650 basis points, after which they
The central bank said it sold $38.8 million to banks at its
foreign currency auction, with the cut-off price weakening to
6.9835 Egyptian pounds to the dollar from 6.9813 at Wednesday's
The currency dipped much more on the black market, with one
dealer in central Cairo quoting 7.58 pounds to buy dollars and
7.63 pounds to sell dollars, compared to 7.48 and 7.51 on
"It will probably keep falling ahead of the June 30
protests," said the dealer.
The central bank introduced the auctions at the end of
December to help stave off a currency crisis and thwart a run on
the pound. Since then, the currency has lost more than 11
percent of its value on the official market.