| The political grease (heart beat of a country) ... Egypt unofficial reserves fall $3.3 billion Reuters Tuesday, March 8, 2011 10:41:44 PM CAIRO - The Egyptian central bank's unofficial reserves plummeted by $3.3 billion in February, bringing its total decline in foreign currency assets during the month of political unrest to $5 billion, the bank said. So what happens when a countries central bank has no reserve currency ... can you say 'life support' by the IMF or other central banks willing to take the risk ... what are the assets of the country that are fungible? | |
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| Analysts say that with its reserves sliding, Egypt's pound could weaken steadily and that more capital may flow out of the country when the stock market, which has been closed since January 27 due to the unrest, reopens for trade. The central bank said on Monday its official reserves fell a more modest $1.7 billion in February to $33.3 billion, but analysts said this did not reflect the magnitude of the outflow. Analysts say the unofficial reserves are held in deposits at commercial banks. The funds come from the sale to foreigners of government paper with maturities of one year or less, dubbed "hot money", so they may be quickly depleted when money flows out, said an analyst outside Egypt who declined to be named. Analysts and bankers say both Egyptians and foreigners transferred large amounts of money out of the country in February, during and after the street protests that eventually ousted former President Hosni Mubarak. The protests scared away tourists, foreign investors and to a lesser extent remittances from workers abroad. The amount of "deposits not included in official reserve assets" nose-dived to $36.5 million at the end of February from $3.51 billion at the end of January, central bank figures showed. At the end of December, the figure was $7.26 billion. "The latter indicates that nearly all foreign investments in T-bills left the country by end-February, leaving no further downside risks for reserves and capital outflows on that front," EFG-Hermes said in a note on Tuesday. Some 22.5 billion Egypt pounds in Egyptian treasury bills matured in February, and bankers said few foreign investors rolled over the portion they were holding, but rather cashed out and transferred the funds into dollars and out of the country. Foreign investors, taking advantage of high yields and a relatively steady currency, had been avid buyers of Egyptian treasury bills, and at the end of November held bills worth 61.30 billion Egyptian pounds, according to central bank data. EFG-Hermes said it expected the central bank to allow a gradual weakening of the Egyptian pound against the dollar, with the exchange rate falling to 6.30 pounds to the dollar by the end of the year from the current 5.90 pounds. "We expect the 6.00 pound level to be tested when the stock market opens," it said, adding that the continued delay in reopening the stock exchange risked encouraging even more capital outflows. The stock exchange has been closed since January 27 because of political unrest. EFG-Hermes said also forecast that total reserves would fall to $29 billion by the end of the year. BNP Paribas said a further heavy slide in Egypt's reserves could also prompt further credit ratings downgrades. "We think the pound will continue to depreciate albeit with heavy involvement of the central bank. Should reserves drop towards $20 billion, we would not rule out further rating actions, especially given very poor outlook for economic growth, which will put a strain on public finances," BNP Paribas wrote in a note. | |
Central Bank: Libyan Currency Reserves at End of First Quarter Stood at $97.9
10/08/2010 20:15:00
Libya's foreign currency reserves stood at $97.9 billion at the end of March, virtually unchanged from the previous quarter, official data showed on Wednesday.
Reserves totalled $98 billion at end-2009, buoyed by high prices for the country's main export, oil, and returning foreign investments.
Figures released by the Libyan central bank's research and statistics department showed reserves stood at just $23.9 billion in 2004.
Anybody Got a Mint?
A private British firm was under contract to print Libya's currency. Why won't Qaddafi make his own dinars?
Posted Wednesday, March 2, 2011, at 6:44 PM ET
The British government crippled Muammar Qaddafi's attempt to fund his faltering regime this week by impounding nearly $1.5 billion worth of Libyan dinars, which had been printed under contract by a British firm. Wait, how many countries outsource their currency?
Half the world. Between 10 and 20 percent of all bank notes around the globe are printed by private companies, such as the U.K.'s De La Rue, the Canadian Banknote Company, Giesecke & Devrient in Germany, and Crane, a printer working in Sweden and Massachusetts. Of the world's 171 currency-issuing authorities—there are more countries than currencies, because of the EU and an economic union of West African countries—around 50 percent outsource some portion of their printing needs. Giesecke & Devrient, for example, prints currency for five dozen countries, and Canadian Banknote fills orders for 20. (There may be overlap in those numbers. Central banks sometimes split production of different denominations between companies.) It's impossible to compile a complete list of outsourcers, though, because many governments don't like to talk about the practice, and the printing houses refuse to release their client lists. Singapore, Finland, Sweden, Bahrain, and Qatar are known to outsource all of their printing. Controversy erupted in India last year when its outsourcing became public. The Philippines has been ordering notes from abroad for years, with mixed results. In 2005, the French company Oberthur misspelled the president's name on some of the bills.
Smaller countries outsource their printing needs for economic and technical reasons. Bank note production is a niche business, and the machines required to make modern currency are both expensive and rare. The smallest and cheapest printing systems available today can produce around a billion notes per year, so if a country needs fewer than that—and many do—they'd be wasting their investment. (For reference, the U.S. Bureau of Engraving and Printing churned out more than 9 billion notes last year.) Some smaller countries choose to keep their printing in-house despite the inefficiency, for national security reasons. (More may do so after what the U.K. did to Qaddafi.)
Even if a country can afford printing machines, it's hard to keep up with constantly evolving anti-counterfeiting measures. Producers use robotic etching devices, inks that change their appearance in different lights and at different viewing angles, laser marking, and pixelated watermarks. The paper itself can be made of cotton, polymers, or a combination of the two and has metal and magnetic elements interwoven. Central bankers around the world can specify which of these products they want when they place an order. High-denomination currencies are usually the most expensive to produce, because they're low-volume and tend to be equipped with the most stringent security measures.
Some aspects of the currency-outsourcing industry are shrouded in mystery. In addition to keeping their client lists under lock and key, producers won't disclose how they transport billions of dollars in cash from their warehouses to central banks abroad. Nor will they say how much they charge for printing a bill. The U.S. Bureau of Engraving and Printing spends about 6 cents per note, but that's on a nonprofit basis and with the benefit of an enormous economy of scale.
The ordering process is tightly controlled, so don't try to order a shipment of vanity notes for the Bank of [Your Name Here]. Printers must be certified by the central bank they're working for. The central banks, in turn, have to register with the World Bank for the right to order currency from the printers. The printing companies can only take orders directly from the central banks. "Not even a head of state can buy cash—his central bank must place the order." Give me a Big Mac and large coke ... do you want fries with that order?
Explainer thanks Ian Shaw of Canadian Banknote Co. and Heiko Witzke of Giesecke & Devrient. Thanks also to reader Wynne Beers for asking the question.
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Libya is to host the OPEC summit for the year 2012 as a result of a decision adopted by the summit on Sunday in Riyadh, Saudi Arabia.OPEC members will also discuss the dollar issue at the Dec. 5 meeting in Abu Dhabi.
