CUR­RENCY CON­TROLS MAY KILL THE PA­TIENT

Business monthly (Egypt) - - IN DEPTH - BY TAMER HAFEZ

For sev­eral months now, busi­ness has been go­ing down­hill for Mohsen el Tagoury, a Dami­etta-based fur­ni­ture de­signer and maker who ex­ports ta­bles and chairs and other items else­where in the Mid­dle East and Africa. The de­mand is still there, he just can’t meet it. “Right now, all my prob­lems are be­cause I can’t get enough dol­lars,” he says. Like most Egyp­tian man­u­fac­tur­ers, Tagoury re­lies on im­ported ma­te­ri­als to make his fur­ni­ture. But thanks to strict cur­rency con­trols put in place ear­lier this year, he is strug­gling to pull to­gether the hard cash to pay for them. In late 2014, for­eign cur­rency—in short sup­ply since the 2011 revo­lu­tion—be­came par­tic­u­larly scarce, and to get dol­lars, Tagoury, like just about ev­ery­one else, was forced to pay a pre­mium on the black mar­ket. “It was a squeeze,” he says. “But we were get­ting by.”

In late Jan­uary, how­ever, the Cen­tral Bank lim­ited for­eign cur­rency de­posits in banks to $10,000 a day and $50,000 a month. It also al­lowed the over­val­ued pound to slide a bit, bring­ing it closer to the unof­fi­cial ex­change rate. CBE Gover­nor Hisham Ramez promised that these moves would “elim­i­nate the dol­lar black mar­ket,” thereby re­as­sur­ing much-needed for­eign in­vestors. More than six months later, the mea­sures have in­deed slowed Egypt’s un­der­ground cur­rency mar­ket, with busi­nesses un­able to put black mar­ket cash in the bank and forex of­fices no

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