Exceptional measures taken by Egyptian banks to stop the back door to dollar smuggling

Although the Central Bank of Egypt seeks to legalize dollar exchange operations for customers due to its low revenues, citizens are seeking to exploit the loopholes and exchange dollars from the bank at the official rate and benefit from the parallel market price.

Many Egyptian banks decided to stop dealing abroad with newly issued credit cards in Egypt, starting tomorrow and for a period of 6 months.

The price of the US dollar against the Egyptian penny

The price of the dollar against the Egyptian pound in local banks recorded a value ranging from 30.80 pounds to 30.91 pounds.

The Central Bank of Egypt set online purchases in dollars for Egyptians residing inside Egypt at about $250 per month, while it established several procedures for withdrawing dollars from abroad, which were soon eased after they led to customers reluctance to go to the black market.

Obtaining dollars from banks

According to an official source in a government bank, there is fraud among citizens to obtain dollars from the bank at the official rate and benefit from its price in the parallel market or use it to travel abroad.

He explained that the recent period witnessed a great demand for opening accounts to obtain a credit card under which the dollar could be withdrawn from abroad according to the specified value after informing the bank issuing the certificate, which led to increased pressure on banks to provide the dollar.

Withdrawals from abroad

The official pointed out that the decision to stop withdrawals on local credit cards for a period of 6 months is aimed at not bleeding the dollar reserve in Egyptian banks.

For his part, Hani Al-Iraqi, a banking expert, believes that the limitation of withdrawals in dollars from abroad has decreased for government banks, which reduced the value in Egyptian dollars, in exchange for which dollars are transferred to customers wishing from abroad, and the value with banks remained high for a period of time due to the lack of intensity in requests for dollars.

Requests for dollars

He explained that over time, customers’ requests for dollars abroad increased in exchange for depositing amounts in Egyptian currency in their accounts with private banks, which led to them reducing the limit allowed to customers to almost more than double.

The Monetary Policy Committee of the Central Bank of Egypt decided in its meeting on Thursday, December 21, 2023, to maintain the overnight deposit and lending interest rates and the Central Bank’s main operation rate at the level of 19.25%, 20.25% and 19.75%, respectively. The credit and discount rates were also maintained at 19.75%.

The Central Bank explained that economic activity was characterized by a slowdown, as the restrictive monetary policies followed by banks contributed to lowering economic growth expectations compared to what was presented to the Monetary Policy Committee at its previous meeting.

Global commodity prices, especially energy, witnessed a decline in general, as a result of the decline in speculation regarding expectations of a shortage in oil supplies and a decline in global demand.