Egypt’s ABC bank saw a week’s worth of dollar inflows in the single day after the Central Bank of Egypt introduced new limits on dollar cash deposits last week, says CEO Akram Al-Tenawy.
There has been a sustained increase in the dollars being sold to the bank since the decision, says Tenawy, which indicates that the CBE’s strategy to rein in the country’s foreign currency black market and increase foreign currency liquidity in the Egyptian banks is working.
Last week, the CBE restricted cash deposits in US dollars to a maximum of $10,000 a day and $50,000 a month in Egypt's banks in an attempt to eradicate the black market by making it impossible for companies to buy large amounts of foreign currency and then deposit them in banks.
Unable to deposit foreign currency in ABC, clients sold their dollars to the bank, Tenawy told Ahram Online on Tuesday.
Client demand for dollars at the bank on average reaches $12.5 million a week, says Tenawy, while the bank was previously only able to aquire $4 million each week through the CBE's four foreign currency auctions to banks.
The new restrictions have stirred fears among importers of not being able to acquire dollars from the black market because of the deposit limits, while there is an ongoing shortage of dollars at the banks.
The CBE has also been devaluing the currency since 18 January in an attempt to narrow the gap between the official rate and the unofficial rate offered illegally in exchange bureaus.
The Egyptian pound currently trades at 7.53 per dollar on the official market, while the unofficial rate was 7.75 per dollar on Monday.
After the 2011 popular uprising caused investors to flee and tourism revenues to tumble in Egypt, the CBE defended the pound against sharp devaluations, which led to the creation of a currency black market.
The gap between the official and unofficial exchange rates widened by more than 80 percent in 2014.