Egypt bourse to remain volatile on FX fears

After two years of political upheaval, foreign currency reserves in Egypt have fallen to critically low levels
Cairo stock exchange
By Reuters
Thu 04 Apr 2013 10:14 AM

Cairo's benchmark is expected to remain volatile on Thursday as institutional investors stay away and traders sell stocks on fear Egypt's currency could weaken further.

After two years of political upheaval, foreign currency reserves in Egypt have fallen to critically low levels, limiting Egypt's ability to buy wheat, of which it is the world's biggest importer, and fuel.

The main share benchmark fell 2.2 percent on Wednesday to its lowest level since December 6.

"Egypt is trading at a discount due to the political and economic risks it has been facing - obviously the volatility will be high," says Marwan Shurrab, vice-president and chief trader at Gulfmena Investments.

"The market is unpredictable due to the fact that most trading is happening on the retail level and there's an obvious lack of institutional investors in the market."

Global concerns will also weigh on the Gulf bourses.

International investors are nervously watching developments in the Korean Peninsula, while Asian stocks are down after weak data stoked concerns the key American jobs report due later in the week will signal slowing US growth.

Kuwait's banks will be in focus after parliament approved a law on Wednesday to buy some citizens' personal loans and write off the interest after lawmakers argued that banks had overcharged Kuwaitis for credit.

Under the law, banks would have to pay back any overcharged interest to citizens. This would apply to interest charged at more than 4 percent over the discount rate and it was not immediately clear how much this would cost.

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