Egypt lifts cap on foreign currency deposits for companies importing basic goods

Wednesday 09-03-2016 04:22 PM

United States one dollar bills are curled and inspected during production at the Bureau of Engraving and Printing in Washington November 14, 2014. REUTERS/Gary Cameron

CAIRO, Mar 9 (Aswat Masriya) - The limit placed on cash deposits and withdrawals made by companies that import basic goods was lifted on Wednesday, the governor of the Central Bank (CBE) of Egypt said.   

The limits set for other companies remain in place, Tarek Amer said. He told Aswat Masriya that he does not have fears that the price of the dollar will skyrocket on the black market as a result of the decision.

The CBE has adopted numerous measures throughout the past year to curb trading on the parallel market but lifting the cap on dollar deposits for some companies will increase the demand for dollar, likely raising its price on the black market.

The black market has made a strong comeback in recent months and while the dollar is changing hands for 7.73 to the Egyptian pound in CBE auctions, on the black market, it has been trading for well over 9.5 pounds in recent days.  

Today's decision comes one day after the CBE lifted the cap on cash deposits and withdrawals that individuals can make in foreign currencies.    

In a bid to put an end to dollar trading on the black market, the CBE introduced a cap on foreign currency deposits for individuals and companies in February 2015, limiting them to depositing up to $10,000 daily and up to $50,000 a month.

In January, the bank raised the ceiling for deposits made by companies that import basic goods, allowing them up $250,000 monthly, with no limit on daily deposits.

The CBE also raised the maximum limit to $1 million for deposits made by exporting companies that need to import goods for their production, last month.

Although heavily reliant on imports for food and energy, Egypt is facing a dollar shortage especially after sources of hard currency inflows like tourism and investment slowed down.    

The Egyptian state is facing pressures to depreciate the pound, with analysts saying that the cash-strapped government can no longer support the current price of the pound against the dollar. 

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