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UPDATE 1-Egypt cbank says no target level for pound-agency

Published 04/03/2011, 10:57 AM
Updated 04/03/2011, 11:04 AM

* Says bank would "intervene firmly" if speculation

* Reserves fell to $33.2 bln at end-February (Adds detail, background)

CAIRO, April 3 (Reuters) - Egypt's deputy Central Bank governor said the bank had no target for the Egyptian pound and the level of the currency would depend on supply and demand, state news agency MENA reported on Sunday. "The central bank's strategy is clear," MENA cited Hisham Ramez as saying. "Our goal is not the price, but leaving it to supply and demand." Ramez said the central bank would "intervene firmly" if speculators target the pound, as it did on Feb. 8 during protests that led to the toppling of President Hosni Mubarak.

Ramez said last month the Central Bank was prepared to allow the pound to fall gradually in coming months if demand for the currency were to decrease, and that it was not targeting a specific exchange rate.

On Feb. 8 the Central Bank intervened in the market to prop up the pound, helping the local currency to strengthen against the dollar for the first time since the eruption of political protests on Jan. 25.

It had last intervened directly in early 2009 in the wake of the global financial crisis, it said.

Before the revolt, the central bank had foreign currency reserves of $36 billion, falling to $33.2 billion at the end of February, said Ramez, owing to a balance of payments deficit caused by a decline in tourism and other revenues.

A central bank statement in March estimated that the balance of payments would show a deficit of $3 billion in the Jan-March quarter compared with a surplus of about $557 million in the Oct-Dec quarter. Ramez added that he expected reserves to fall further, without giving a figure, adding that the number would be announced within days.

The pound was trading at 5.962 to the dollar at 1344 GMT. (Reporting by Shaimaa Fayed and Marwa Awad; Editing by Erica Billingham)

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