Egypt relaxed restrictions on foreign exchange bank deposits in an effort to boost exports after the local currency weakened to a record in black market trading.
As a dollar shortage intensifies, the central bank raised the monthly deposit limit for exporters who use imported goods in their products to $1 million, according to an e-mailed statement. The previous cap ranged from $50,000 to $250,000. Companies must show within three months that their export proceeds are at least equivalent to the amounts they deposited, the bank said.
The central bank “pushed another major category of importers to the free market for foreign currency — the so-called black market,” Hany Genena, head of equities strategy at Cairo-based Beltone Financial, said in an e-mailed report Tuesday. “This is a de facto flotation.”
Foreign investment has been struggling to recover to levels seen before President Hosni was toppled in 2011.The dearth of dollars has driven the price outside the banking system to a near-record premium of 14 percent over the official rate.
Officials have been scrambling to meet growing demand for foreign currency to keep North Africa’s biggest economy running amid declining exports and tourism. The central bank raised the deposit limit fivefold for importers of staple foods and medicine last month to $250,000.
Egypt has kept the official price of the pound unchanged since November at 7.83 per dollar, following three devaluations in 2015. The currency traded Monday at 8.96 a dollar on the black market, according to the average of five money changers surveyed by Bloomberg.
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