20110308
reuters

CAIRO (Reuters) - 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.

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.