Egypt pound weakens to near 7-year low

The Egyptian pound weakened to its lowest in nearly seven years on Monday as investors shifted money into dollars in the belief the central bank was prepared to allow the pound to slide even lower, traders said.

The central bank seemed to be letting the currency weaken gradually since it broke the 6 pound to the dollar barrier at the end of November, traders said.

"There is lots of pressure on EGP," said a Cairo-based dealer. "There was local demand from individuals and corporates who anticipate more depreciation and who are trying to get the best possible rates."

Egypt's central bank has helped stem a decline in the pound over the last 11 months by drawing down its foreign reserves.

Net foreign reserves sank $1.87 billion last month, central bank data show, with many investors pulling funds from the country ahead of a parliamentary election and after violent protests against the ruling military council erupted in Cairo.

The pound EGP+ was bid on Monday as low as 6.022 to the dollar, its weakest since Jan. 3, 2004, and down from 6.016 on Thursday.

Egypt's foreign reserves were $20.2 billion in November, down from around $36 billion at the start of the year.

One trader forecast a minor resistance level at 6.035 to the dollar and a stronger resistance level at 6.1175.