New operational procedures introduced to stabilize Egypt\'s forex market
The Central Bank of Egypt held a press conference on January 28, during which Minister of Economy & Foreign Trade Youssef Boutros Ghali announced that the executive regulations of Law No.38 of 1994 have been modified to ensure the stability of the foreign exchange market. As such, the CBE will establish a new foreign exchange desk responsible for recording forex statistics as well as overseeing and organizing foreign exchange operations. Moreover, the minimum paid-in capital for exchange offices has been raised from LE1 million to LE10 million. Exchange offices will be given a grace period of three months to adjust to the new requirement. Moreover, exchange offices will be required to disclose audited financial statements on a three-month basis and will no longer be permitted to deal in travelers’ checks.
CBE Governor Ismail Hassan also made the following operational procedures public:
1. The CBE has set the exchange rate for January 30 at LE3.85/$1, which is the average of the exchange rate in both banks and exchange offices over the previous three weeks. Moreover, other currencies’ rates are to be set according to the aforementioned rate.
2. Banks and exchange offices are allowed to respond to market forces within a 1 percent limit, so that the current exchange rate would be allowed to trade in a range between LE3.81 and LE3.89.
3. The CBE will engage in forex transactions to stabilize exchange rate movements and will review the announced rate periodically depending on market conditions.
4. Banks and exchange offices are to disclose their forex operations to the CBE forex desk on an hourly
basis, and the CBE in turn discloses the average weighted exchange rate on a daily basis.
5. Banks and exchange offices are to announce their forex positions to the CBE’s desk.
6. Exchange offices are required to sell any foreign currencies in excess of their authorized operational accounts to banks at the end of each working day.
7. As of today, January 29 the CBE will cover all outstanding positions denominated in foreign currencies at today’s announced rate.
8. Exchange offices are allowed to sell (or buy) foreign currencies to the banking system according to the aforesaid rules.
9. The new operational procedures will be effective as of January 30, 2001.
Prime Securities S.A.E.
© 2001 Mena Report (www.menareport.com)