In long-awaited move, Egypt central bank scraps FX
restrictions for importers
Send a link to a friend
[November 28, 2017]
By Eric Knecht
CAIRO (Reuters) - Egypt's central bank
removed caps on deposits and withdrawals of foreign currency for
importers on Tuesday, lifting some of the last currency controls put in
place after a 2011 uprising.
The move is another sign that bank liquidity is improving as a result of
Egypt's $12 billion, three-year International Monetary Fund program and
a currency flotation that halved the pound's value and helped crush the
black market for dollars.
Egypt imposed strict controls on the movement of hard currency as the
2011 uprising drove away tourists and foreign investors, key sources of
foreign currency, forcing importers to rely on a more expensive black
market for dollars.
In 2012, it limited deposits to $10,000 per day and $50,000 per month
and set a $30,000 per day withdrawal limit for importers of
Removing capital controls was among the reforms agreed to as part of the
IMF program adopted in 2016, which also included tax hikes and subsidy
'REMOVED AT LAST'
Businesses and analysts welcomed the decision to lift the deposit and
withdrawal caps, and said it effectively marked the end of currency
controls put in place since 2011 that also included strict limits on
currency transfers abroad.
"The limitations which the private sector had on them with regard to
foreign currency are now removed at last," said Angus Blair, chief
operating officer of Pharos Holdings, an investment bank
"It's a confidence building measure that shows the private sector that
things are back to normal," he said.
[to top of second column]
An employee counts Egyptian pounds in a foreign exchange office in
central Cairo, Egypt December 27, 2016. REUTERS/Mohamed Abd El Ghany/File
Central bank foreign reserves have climbed in the year since the IMF-backed
reforms began, hitting $36.7 billion at the end of October, roughly
twice as much as before the IMF agreement.
"This is positive but expected, given FX liquidity having improved
substantially in banks since the currency float," said head of research
at Naeem Brokerage Allen Sandeep.
"What we would be keen to see from here however is whether this would
have an impact on the exchange rate."
The Egyptian pound <EGP1=> was trading at around 17.65 per dollar on
Tuesday, roughly the same level as in recent months.
An IMF team this month completed its second review of Egypt's
performance under the program and the IMF board is expected to approve a
third, $2 billion, disbursement of funds within weeks.
Friday's attack by gunmen on a mosque in Sinai, in which more than 300
worshippers were killed -- the worst attack by militants in Egypt's
modern history -- is not expected to have a significant impact on the
(Additional reporting by Ahmed Tolba and Arwa Gaballa; Editing by
Catherine Evans and Hugh Lawson)
[© 2017 Thomson Reuters. All rights
Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.