20110207
reuters

CAIRO (Reuters) - The Egyptian pound hit a 6-year low on Monday after banks reopened their doors to international deals, with the government facing a new test of sentiment later in the day when it seeks to sell $2.5 billion of short-term debt.

The stock exchange, whose doors have been shut since January 27, has said it will remain closed through Tuesday at least.

The pound traded as weak as 5.951 to the dollar on Monday, a new six-year low and down 0.4 percent from Sunday's close and 1.7 percent from Thursday's, as foreign investors and Egyptians placed orders to sell the currency after a week-long closure.

Egypt's London-listed stocks were, however, all in positive territory and the cost of insuring Egypt's debt fell in the five-year credit default swap market.

The pound was also looking more resilient than some people had expected. Traders said state-controlled banks seemed to be selling dollars to support the local currency.

"Things are stable. I can't say they're good, but they're not collapsing," said a trader at a Cairo-based bank. "There has been no central bank intervention. I don't think it will do so unless the pound reached 6.1 or 6.2 to the dollar."

The currency had closed at 5.855 on January 27, before the week-long closure as protests erupted against President Hosni Mubarak's rule.

Egyptian banks, which are operating reduced hours, opened at 10 a.m. (0800 GMT) and will close at 1:30 p.m.