© Reuters.
Investing.com – In a new step and sudden decision to target the black market and dry up its sources, Egyptian banks have issued new guidelines to customers on limiting credit card withdrawals from abroad.
As banks have been trying to limit withdrawals and lower their limits, in an effort to protect their foreign currency balances, after noticing large withdrawals from overseas, in order to prevent speculation on the dollar, given the current circumstances.
This decision comes just days after the Central Bank’s decision on market re-discipline, as some traders began to take advantage of the market chaos by raising prices and not entering dollar export earnings into the official system.
pound today
The Central Bank of Egypt’s official rates screen today revealed the stability of the pound against the dollar, with the selling price registering levels of 24.7653 pounds per dollar, while the buying price recorded levels of 24.6865 pounds per dollar.
And in the national banks, National Bank of Egypt and Banque Misr, the dollar exchange rate stabilized at levels of 24.69 pounds per dollar for sales and 24.64 pounds per dollar for buys.
In private banks, Al-Masry Al-Khaleeji, Abu Dhabi Islamic, Mashreq Bank, Al-Ahly of Kuwait (Piraeus) and Commercial International (CIB), the sale price recorded 24.75 pounds per dollar, while the price of purchase recorded 24.72 pounds to the dollar.
pound on the black market
After the fund’s loan signing, black market dollar exchange rates fell to £29 to the dollar, down from £38 to the dollar before the signing, according to a Reuters report.
According to CNB Arabia, the exchange rate of the dollar on the black market surpassed the levels of 33 pounds per dollar, in a fierce state of speculation, in light of expectations of a third listing of the local currency.
According to the Al-Arabiya channel, a state of confusion dominated dollar traders and traders in Egypt’s parallel foreign exchange market, as the dollar’s exchange rate continued to fall to the £29 level, compared to £38 in last Friday.
Bank decision
Some banks have announced changes to foreign currency cash withdrawal limits on all cards, effective yesterday, with the limits being changed and the use of the cards restricted to some purchases from abroad.
CIB, Al Ahli QNB HSBC and Emirates NBD have communicated to customers, via SMS and email, the change in foreign currency cash withdrawal limits on all cards.
Banks operating in the local market have allowed customers outside of Egypt to use their bank cards denominated in Egyptian pounds for purchases and withdrawals in the currency of the country where they are located, according to the SWIFT system.
Central resolution
The Central Bank of Egypt addressed a letter yesterday Sunday to banks under its regulatory umbrella, in light of the violent fluctuations in the country’s gold markets, which have caused prices to reach unprecedented levels.
According to the directives of the Central Bank, in the event that the proceeds of export operations relating to gold do not arrive within a maximum period of 7 working days from the date of shipment, and after the bank follows up with the customer for only the next 3 working days, it must inform the Central Bank.
According to the decision of the Central Bank, the bank must inform various other entities, including: the Ministry of Commerce and Industry, the Customs Agency, and the Stamps and Scales Authority, to take the necessary measures, and the new decision means depriving the infringing source of gold from being exported again.
The decision helps to provide dollar revenues for imports of important products, such as food products and manufacturing raw materials, and to save the dollar by relieving pressure on its prices, which have been rising steadily for several months.
next meeting
The significance of tomorrow’s meeting comes after a senior International Monetary Fund official said the fund expects daily changes in the exchange rate of the US dollar against the Egyptian pound, in the event that conditions for import financing are met is lifted by the end of this month.
It comes after the International Monetary Fund agreed on Friday to give Egypt a $3 billion loan and give $347 million as an upfront payment, and the loan guarantees Egypt will receive about $14 billion from partners .
“We know the central bank has not yet stepped in to pump reserves into the foreign exchange market since we reached expert-level agreement,” Vladkova Hollar, the IMF’s head of mission in Egypt, said in an interview with Reuters.
Central resolution projections
Market experts had expected Egypt’s central bank to lift its overnight deposit interest rate by 200 basis points on Thursday as part of its attempts to curb rising inflation following the sharp depreciation of the local currency.
Median expectations were that the Central Bank of Egypt would raise deposit interest rates to 15.25% and loan interest rates to 16.25% at the regular meeting of the Monetary Policy Committee.
The central bank raised interest rates by 200 basis points in a surprise meeting held on October 27, and the local currency depreciated by 14.5% on the same day.
– EFG Hermes (EGX:) said that in the absence of movement in the FX market, we expect the central bank to raise interest rates by 100 basis points in an attempt to signal continued monetary tightening amid expectations of rising inflation.
Egypt’s headline inflation rate jumped to a five-year high of 18.7% in November, from 16.2% in October.
- Oxford Economics said: “With inflation rising more than expected, we expect the central bank to raise interest rates by another 100 basis points.”
- The Research Department of the HC Securities and Investment Group has expressed its expectations regarding the possible decision of the Monetary Policy Committee in the light of the current situation in Egypt, as it predicted that the Central Bank of Egypt would raise the interest rate by 200 basis points in to address inflation at the next meeting scheduled for Thursday, December 22nd.
- – BNP Paribas (EPA:) expects the Central Bank of Egypt to hold an extraordinary meeting before the International Monetary Fund discusses a financing deal for Egypt at a meeting on Dec. 16, according to a research note released by the bank .
- The Bank of France expected the Central Bank of Egypt to move more decisively towards floating the pound and raise interest rates by at least 2%.
