- Mohamed Hamida
- BBC – Cairo
Several measures approved by the Central Bank of Egypt to limit the infiltration of hard currency abroad in light of the decline in foreign exchange reserves in the country
The two largest government banks in Egypt, the National Bank and Banque Misr, doubled the return on dollar certificates to exceed 5%, following it was 2.25%. Egyptian banks also started setting the monthly ceiling for withdrawing US dollars from ATMs abroad, to reach in some accounts 500 dollars per month.
Several measures approved by the Central Bank of Egypt to limit the infiltration of hard currency abroad in light of the decline in foreign exchange reserves in the country.
These measures come at a time when the Egyptian reserves of foreign currency are declining, as the cash reserve recorded in September 33.1 billion dollars, compared to regarding 45 billion dollars last February.
Setting a ceiling for withdrawals in dollars from abroad
Dr. Hisham Ibrahim, professor of economics at Cairo University, believes that this tightening of withdrawal limits is an attempt to preserve the hard currency by limiting the withdrawal of the dollar from the country abroad, a measure similar to what the Egyptian government took following the large flotation operation that it carried out in 2016.
Dr. Hassan El-Sadi, a professor of finance at Cairo University, told the BBC that there is a manipulation by some of the cash exchange of the dollar abroad and benefiting from its price at home, in an attempt to open alternative black markets for banks to provide the dollar in the markets in light of a dollar crisis, which is what The decision is justified by the limits of withdrawal, as he described it.
The head of the Egyptian Banks Association, Mohamed El-Etreby, said in televised statements that a 100 percent increase in US dollar withdrawals from abroad was observed from last January to September this year, which prompted Egyptian banks to put an end to dollar withdrawals from abroad. the outside.
Al-Etribi added that customers who have dollar accounts in Egypt are not subject to the imposed withdrawal limits, and these procedures apply to those who have bank accounts in the Egyptian pound and withdraw in dollars from abroad.
Al-Etrebi said that the purchase limits for individuals using bank cards are still open, depending on the type of the card, reaching $20,000 per month, adding that treatment and study abroad are among the cases excluded from the withdrawal limits following studying each case.
Customers of banks located abroad withdraw cash from ATMs in the same currency of the country in which the customer is located, and then the banks make a clearing to pay the value of these withdrawals to foreign banks in US dollars, which affects the stock of US dollars in the country.
photo released, Archyde.com
These measures come in an attempt to maintain the dollar’s stock inside Egypt
These measures come in an attempt to maintain the stock of the dollar inside Egypt. The cost of the import bill from abroad this year, according to official prices, is eighty billion dollars, and it represents Egypt’s needs for goods as well as debt installments.
Dr. Hisham Ibrahim, Professor of Economics at Cairo University, believes that although the purpose of these measures is to limit manipulation of the dollar’s exchange from abroad, they ultimately serve the benefit of providing the dollar, as the country needs more than a hundred billion dollars annually to finance imports and installments. And that these measures will not significantly affect the provision or preservation of the dollar.
Increase the interest on dollar certificates by 100 percent
Not only did the Egyptian banks set withdrawal limits, but they also took a decision to raise the interest on US dollar savings pots by 100 percent, from 2.25 percent to 5.31 percent inside the country.
Egyptian government banks had raised the interest rate on dollar certificates in 2016 before they began to gradually reduce them.
Mohamed El-Etreby, head of the Egyptian Banks Association, said that the successive rises in US interest rates made US savings vessels more attractive to investors, which calls for a move by Egyptian banks to raise interest rates on savings certificates in US dollars to weaken to preserve dollar resources and keep investors in US dollars.
Dr. Hisham Ibrahim says that slowdowns are always accompanied by raising interest rates, as investors prefer to store money in savings vessels that give greater benefit than direct investment in local markets.
Ibrahim added that the basic indicators since the beginning of the year clearly indicated the intention of the US Federal Reserve to raise interest rates, and therefore the decision to raise interest rates on dollar certificates in Egypt came late and might have been earlier in order to limit the flight of hot money, as he put it. .
Ibrahim believes that the previous thought had fears of raising the interest rate on dollar certificates, because reducing the difference between interest on the pound and interest on the dollar might put pressure on the Egyptian pound, but global conditions now have changed dramatically.
The Egyptian currency has lost regarding 24% of its value since March, with the Egyptian pound reaching $19.7 on Monday.
Dr. Hassan Al-Sadi believes that it is too early to judge the effectiveness of this procedure, as it may save some dollars, but it is more effective to focus on production to create continuous dollar resources without interruption and without fears, and the funding should go to creating small projects and maximizing production operations.
The deadlines of the new dollar certificates, which were provided by the banks to the investors, give indications of the bank officials’ vision of the global economic movement, as the banks set the savings certificates in dollars between one to three years as a maximum.
These forecasts are betting on the end of the war in Ukraine and the return of interest rates to lower, in the event of a decline in inflation rates in the world.
