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Egyptian unrest sparks financial fears

Egyptian unrest sparks financial fears
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As the protests and uncertainty continue in Egypt, its reputation as a stable country, a promising emerging market and an attractive tourist destination is crumbling.

Banks and most businesses remain closed, along with the stock market.

With nearly three million barrels of oil each day passing through Egypt’s Suez Canal and its pipelines – plus fears of the unrest spreading to other Middle East countries – the price of Brent crude oil went above 100 dollars a barrel.

Economist Salah Addesouky said: “The current economic situation is very difficult because of this political crisis.”

As Cairo residents complained about skyrocketing prices – when they could find food – Addesouky added: “The economy can’t bear this crisis. Factories are shut and the economy is in real danger.”

Financial markets are also watching anxiously, particularly in neighbours Jordan and Israel where share trading has been volatile, but not too violent.

Analysts said that foreign investors particularly have been pulling their money out of the region.

As the credit ratings agencies Moody’s and Standard & Poor’s downgraded Egypt’s sovereign debt, worried the government might damage its already under pressure finances by increasing social spending to calm the protests, European major stock markets were weak.

On Monday the euro recovered from Friday’s slump on growing conviction that economic growth and inflation in Europe may mean interest rates in the region rise more quickly than in the US.