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Egypt's banks reopen amid economic worries

Egypt's banks reopen amid economic worries
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Egypt’s banks will reopen later on Sunday after being shut for more than a week owing to the country’s ongoing political turmoil.

Lines have already started forming at ATMs as Egyptians withdraw cash to stock up on food and other basic items.

Investors fear there could be a run on deposits, weakening the Egyptian pound and raising government borrowing costs.

But the central bank has insisted that Egypt’s banking system is solid.

It said it holds 26 billion euros in foreign reserves and can honour all withdrawals and transfers.

A weaker pound would make imported food more expensive, potentially fuelling more discontent.

French bank Credit Agricole estimates the instablity is costing Egypt some 230 million euros a day.

The investment bank has revised down its forecast for Egypt’s economic growth to 3.7% from 5.3% in 2011

Economists also forecast a drop in revenues for the tourist industry, which accounts for nearly six percent of Egypt’s GDP.

The government says at least one million tourists have already left the country since the protests begans on January 25.

Several companies have also temporarily shut their operations in Egypt.

Last week, carmakers BMW, General Motors and Daimler halted production at their Egyptian sites over safety fears.