Egypt’s cbank holds talks with ex­change bu­reaus to cap black mar­ket rates

The Pak Banker - - FRONT PAGE -

CAIRO: Egypt's cen­tral bank held a se­cond meet­ing with for­eign ex­change bu­reaus in an at­tempt to keep black mar­ket rates un­der con­trol as Egypt's cur­rency cri­sis wors­ens and the rate of the dol­lar surges against the pound on the par­al­lel mar­ket. Egypt, which re­lies heav­ily on im­ports, has been fac­ing a short­age of for­eign cur­rency since a 2011 up­ris­ing drove away tourists and in­vestors, two ma­jor sources of hard cur­rency.

The cen­tral bank has been re­sist­ing a de­val­u­a­tion, keep­ing the pound ar­ti­fi­cially strong at 7.7301 against the dol­lar while on the black mar­ket it jumped above 9.8 pounds per dol­lar this week. Of­fi­cially the cen­tral bank al­lows ex­change bu­reaus to sell dol­lars at up to 15 pi­asters ei­ther side of its set price, but the bu­reaus have been known to de­mand more for the green­back when it is in short sup­ply.

"Yes, there was a meet­ing with the cen­tral bank," said Mo­hamed El-Abyad, head of Egypt's For­eign Ex­change As­so­ci­a­tion. Two ex­change bureau sources told Reuters that dur­ing the meet­ing there was an agree­ment to put a limit on the price of the dol­lar on the black mar­ket.

"The agree­ment was not to ex­ceed the 9.25 pounds to the dol­lar price on the par­al­lel mar­ket in re­turn for the cen­tral bank not in­ter­fer­ing with ex­change bu­reaus," one ex­change bureau source, who at­tended the meet­ing, said.

Last month the cen­tral bank re­voked the li­cense of four ex­change bu­reaus af­ter a sim­i­lar meet­ing, in which an agree­ment to cap the price of the dol­lar at 8.6 pounds failed to keep rates within the limit. Abyad, who also at­tended the meet­ing, de­nied that there was an agree­ment on a cap for the dol­lar price on the par­al­lel mar­ket. The cen­tral bank does not have an of­fi­cial spokesper­son and of­fi­cials were not reach­able for com­ment.

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