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Egyptian currency plummets

Cairo - The Egyptian pound fell against the US dollar on Sunday to its lowest level in five years, as many banks finally reopened after a week-long closure owing to the ongoing political unrest and looting.

However, it remained unclear when the Egyptian stock exchange will reopen, as the head of the bourse confirmed it will not work on Tuesday. Officials have indicated that a 48-hour notice period would be given to traders before it resumes functioning.

The exchange was closed for all of last week, after the benchmark EGX30 index lost 17% of its value the previous week. In two days alone, some $12bn were wiped off the exchange's market value, according to some estimates.

On Sunday morning, banks across the country began to slowly open their doors again, with people standing in long queues outside banks in the early morning.

The central bank published on its website a list of more than 400 bank branches resuming operations across Egypt.

The Egyptian pound weakened to 5.93 against the dollar, its lowest level since January 2005.

Nine military planes were used to bring cash to banks across Egypt, the central bank told state-run media.

Banks were, however, operating with reduced hours and regulators have put limits on cash withdrawals, adding pressure to the people waiting in the lengthy lines.

A daily limit of 50 000 Egyptian pounds ($8 500) was enforced on clients.

"I did not have access to last month's paycheck until now. The cash machines were either damaged or not working," said one man named Kamal as he stood outside a banks in central Cairo, waiting to withdraw money.

The unrest began on January 25, right around the time people receive their salaries, causing lean-times for many in Egypt.

"I only have 80 Egyptian pounds ($13) left. I need cash urgently," said Kamal in a tone of desperation as he waited for his turn to use the machine.

However, some branches were not open, especially those in buildings that were damaged by looting.

One security guard said his bank's branches near Tahrir Square, the focus of anti-government protests, were closed.

Moody's Investors Service has downgraded the ratings of five Egyptian banks - National Bank of Egypt, Banque Misr, Banque du Caire, Commercial International Bank (CIB) and Bank of Alexandria - with a negative outlook and a further downgrade not ruled out.

In a sign of how nervous investors are, CIB, the largest Egyptian bank traded outside the country, on the London exchange, lost a third of its value in trading last week.

The country has also seen Fitch Ratings change the outlook for its credit rating from Stable to Negative, and Moody's downgraded the country by one notch from Ba1 to Ba2 with outlook Negative. Also, the cost of insuring against Egypt's debt rose.

How banks handle their reopening is expected to be an indication of when the stock exchange and other financial businesses can return to normal activity, though the political unrest is not expected to end quickly.

The government halted all bank and stock market activity on January 27.

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