File photo: An employee counts U.S. dollar bills at a money exchange office in central Cairo, Egypt, March 20, 2019. (Photo: Reuters)
The business community and banking experts welcomed Egypt’s Ministry of Finance move to liberalise the custom dollar price on Sunday, saying it was a sign of Egypt's stable economy and financial system.
Ahmed Shiha, a member of the General Division of Importers at the Federation of Egyptian Chambers of Commerce, said the decision was a step on the right track for the domestic market and the industry sector.
The price of the custom dollar was fixed for three years, on an exceptional basis, to stabilise the prices of commodities, particularly the imported items the prices of which skyrocketed after the floatation of the Egyptian pound in November 2016, the finance ministry's statement read.
The gradual decline in the price of the dollar in banks, recording EGP 16.5 for $1, renders the price of the custom dollar close to the current dollar price, the statement added.
He told Ahram Online that tying the custom dollar price to the dollar price set by the Central Bank of Egypt (CBE) was the norm, while setting a fixed price was adopted as an exceptional response to the requirements of the Egyptian economic scene at the time.
“In fact, fixing the price of the custom dollar failed to achieve its objectives. It was set to protect the domestic industry and to support the manufacturers from the hiking prices of the exchange rate in the wake of the floatation of the Egyptian pound, especially that raw materials, feedstock, production inputs, and strategic commodities are custom-free,” Shiha said.
The recent decision would not affect the prices of commodities on the market, Shiha said, adding that the difference in the price of the custom dollar and the CBE's dollar price was about 50 piasters. Therefore, he stated, the price difference would not exceed three percent on each imported commodity.
Banking expert Mohsen Khodair said the move was a positive indicator of economic stability. In addition to reflecting the gradual decline in the dollar price, it was telling the exchange rate was heading towards stabilisation. It also proved the improvement in economic indicators were in line with the success of the economic reform programme Egypt adopted in November 2016.
“The economic reforms and their results are laying the groundwork for the Egyptian pound to grow stronger,” he added.
The price of imported goods hiked when the exchange rate went up following the floatation of the pound, affecting importers and consumers alike, former chairman of Misr Romanian Bank Abdel-Rahman Baraka told Ahram Online.
“With the gradual stability introduced to the market thanks to the economic reforms that took place across Egypt's economic sectors, the Egyptian pound is almost stabilising. Hence, the right course is to tie the price of the custom dollar to the CBE's price of the dollar," he said.
With its progressive reform measures, Egypt was heading towards a stable, thriving economy, Baraka added.
Since it was fixed on a monthly basis in January 2017, the custom dollar price had been adjusted four times.