Egyptian banks and exchange companies on Sunday began applying a new exchange rate set by the Egyptian Central Bank in hopes of eliminating the currency black market, but even the government appears to be worried about the next steps to steady the pound.
The set rate is 4.15 pounds per dollar, with a margin of three percent in either direction. Most transactions on Sunday were concluded within that rate due to $125 million pumped into the market by the central bank.
This sum, which constitutes one fourth of the amount the central bank will provide in the market, was scooped up in the morning hours.
The rest of the central bank’s infusions are expected to be bought up during the next two weeks, aggravating the problem of foreign exchange and once again seeing the greenback’s value rise against the pound in the black market.
Egypt’s moves to control the market show that the government is not convinced that the new exchange rate alone will solve the black market problem.
Other official actions seem to be the subject of some hesitation, as the government cancelled a press conference scheduled for Sunday to announce new control measures.
The central bank’s governor refused to issue any statement about the new measures or about the cancellation of the press conference.
Meanwhile, government investigators have spread throughout the market and launched intensive campaigns against illegal dealers. One foreign exchange company was closed on Sunday, and one person was arrested on charges of illegal currency trading.
At the same time, several importers have cancelled letters of credit totaling $250 million because the new exchange rate will raise the cost of their goods, leaving them beyond the reach of consumers.
The most recent modification of the exchange rate, in addition to the previous change six months ago, has led to a 25 percent devaluation of the Egyptian pound.
This, in turn, foreshadows large price increases and may aggravate Egypt’s long-running recession – Albawaba.com
