Egypt lifts restrictions on GDR deals

‘Currency float boosts foreign investment’

CAIRO, July 30, (RTRS): Egypt is lifting restrictions on Egyptian investors who buy global depository receipts (GDRs) by purchasing shares on the Cairo exchange in Egyptian pounds, allowing them to receive their returns in US dollars, bourse chairman Mohamed Omran told Reuters on Sunday.

The bourse said in 2015 returns could only be taken in the local currency, a move that appeared aimed at eliminating an avenue for acquiring dollars amid a shortage of foreign currency.

Also last month, Egypt’s central bank removed limits on international currency transfers, scrapping a $100,000 monthly cap on individual bank transactions in a long-awaited reform intended to lure back needed foreign investment.

As part of a three-year, $12 billion International Monetary Fund lending programme that began late last year, Egypt is obliged to end these controls.

Egypt’s central bank floated the pound in November to unlock foreign currency inflows and crush a black market for dollars that had discouraged people from channelling foreign currency through the banking system.

The currency float is part of the IMF deal aimed at putting Egypt on the road to recovery after years of turmoil that drove away foreign investors and tourists, a major source of foreign currency for the country.

Egypt will lower its customs exchange rate to 16.25 pounds per dollar from 16.50, effective from Tuesday, Finance Minister Amr El-Garhy told Reuters on Sunday.

The new rate will be set for one month, he said, in what is the first such drop in four months.

Egypt began setting a monthly fixed customs exchange rate in January following the flotation of its pound currency in November. It has since set it each month.