Egypt slams brake on falling pound



The steep drop in the value of the Egyptian pound was halted abruptly yesterday after the central bank said it had intervened to shore up the ailing currency.

The pound rose 1.2 per cent against the dollar after the central bank's announcement, further details of which it did not reveal.

But the currency is still down 11 per cent since January 12 because of mass street protests and calls for the resignation of Hosni Mubarak, the Egyptian president.

The currency decline has forced down the value of Egyptian assets, both within the country and of those listed overseas. That has led international investors to focus on bargains that could become available when the Egyptian stock market reopens, which is scheduled for Sunday.

"I see this as a buying opportunity," said Rami Sidani, the head of Mena region portfolio management at Schroders, a major international investment house with US$286 billion assets under management. "But let's be clear: I am going to be very selective."

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Mr Sidani said that when the Egyptian market opened, shares of exporters could be available at attractive prices.

The pound's fall is likely to benefit exporters such as Orascom Construction Industries, which produces fertiliser, because their goods can be sold more cheaply abroad. Conversely, the lower currency will hurt importers that buy products from overseas.

Egyptian companies with securities listed on foreign exchanges have enjoyed sharp price increases in the past couple of days.

Egyptian companies' global depositary receipts (GDR) have rebounded about 10 per cent on the London Stock Exchange since the Egyptian market closed on February 2, Mr Sidani said.

The GDR of Orascom Construction Industries fell 33 per cent on the London exchange ahead of the Egyptian stock market close, but has since rebounded 23 per cent.

The cost of insuring against an Egyptian sovereign debt default continues to fall as investors grow less concerned about the political crisis.

The price on five-year Egyptian credit default swaps (CDS) was flat yesterday at 345 basis points, having fallen 45 basis points since Friday.

CDS generally get more expensive when traders perceive more risk.

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Oliver Bell, a senior investment manager at Pictet Asset Management, echoed the prediction that exporters' share prices are likely to rise.

But he also argued that Egyptian companies with ties to the Mubarak regime could be punished and experience large capital outflows from international investors.

Companies that have traditionally been subsidised or handed a competitive advantage by the government could suffer, Mr Bell said.

The property sector and basic industries such as construction and steel, which require mass buying of raw materials, were cited by analysts as possible losers when the market reopens.

The extended outlook is hardly rosy and some fund managers have slashed growth forecasts for the Egyptian economy this year. Schroders has cut its forecast from 6 per cent to 3.5 per cent and estimates each day of protests costs the government US$300 million (Dh1.1 billion).

Tom Stevenson, an investment director at Fidelity Investments in London, said the crisis had "certainly" affected the Mena region's attractiveness as a long-term investment.

Insuring $10m of Egyptian debt now costs $345,000, down from $450,000 at the height of the protests.

Ain Dubai in numbers

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16 A380 Airbuses: The equivalent weight of the wheel rim.

9,000 tonnes: The amount of steel used to construct the project.

5 tonnes: The weight of each permanent spoke that is holding the wheel rim in place

192: The amount of cable wires used to create the wheel. They measure a distance of 2,4000km in total, the equivalent of the distance between Dubai and Cairo.

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Starring: Akshay Kumar, Radhika Madan, Paresh Rawal

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COMPANY PROFILE

Company name: Almouneer
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Founders: Dr Noha Khater and Rania Kadry
Based: Egypt
Number of staff: 120
Investment: Bootstrapped, with support from Insead and Egyptian government, seed round of
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Investment stage: Series A
Investors: Family offices

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Starring: Nicola Coughlan, Luke Newton, Jonathan Bailey

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Name: Haltia.ai
Started: 2023
Co-founders: Arto Bendiken and Talal Thabet
Based: Dubai, UAE
Industry: AI
Number of employees: 41
Funding: About $1.7 million
Investors: Self, family and friends

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Price, base / as tested Dh395,000 / Dh420,000

Engine 3.5L V6

Transmission Six-speed manual

Power 410hp @ 7,000rpm

Torque 420Nm @ 3,500rpm

Fuel economy, combined 9.7L / 100km

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Amal likes watching Japanese animation movies and Manga - her favourite is The Ancient Magus Bride

She is the eldest of 11 children, and has four brothers and six sisters.

Her dream is to meet with all of her friends online from around the world who supported her work throughout the years

Her favourite meal is pizza and stuffed vine leaves

She ams to improve her English and learn Japanese, which many animated programmes originate in

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Industry: Food and beverage, tech, hospitality software, Saas
Funding size: Bootstrapped for six months; pre-seed round of $1.5 million; seed round of $8 million
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2. Prayer

3. Hajj

4. Shahada

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1. Fasting

2. Prayer

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The Department of Culture and Tourism - Abu Dhabi’s Arabic Language Centre will mark International Women’s Day at the Bologna Children's Book Fair with the Abu Dhabi Translation Conference. Prolific Emirati author Noora Al Shammari, who has written eight books that feature in the Ministry of Education's curriculum, will appear in a session on Wednesday to discuss the challenges women face in getting their works translated.

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Favourite place to travel to: “Thailand, as it's gorgeous, food is delicious, their massages are to die for!”  

Favourite food: “I'm a vegetarian, so I can't get enough of salad.”

Favourite film:  “I love watching documentaries, and am fascinated by nature, animals, human anatomy. I love watching to learn!”

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