Egypt Eases More Banking Restrictions on Foreign Currency

  • Deposit, withdrawal limits removed for `basic' goods importers
  • Caps left unchagned for other companies, central bank says

The Egyptian central bank further eased restrictions on foreign-currency transactions for companies amid a dollar shortage hampering economic growth.

The central bank said on Wednesday that it has removed the withdrawal and deposit cap for companies that import “basic commodities.” The decision came one day after it scrapped the limits for individuals, marking the fourth time this year that the regulator has relaxed restrictions. In January and February, it raised the ceiling on monthly foreign-currency deposits for some companies to up to $1 million, from a $50,000 cap set just 11 months earlier.

The latest decisions come after the shortage of hard currency helped drive the Egyptian pound to a record low on the black market. Governor Tarek Amer, who took office in November, has resisted calls from local investors to devalue the currency out of concern that would stoke inflation in a country where half of the population lives near or below the United Nations poverty line.

The easing of restrictions will improve the availability of dollars “by restoring confidence in the pound and monetary management, which can pave the way for a proper adjustment in the pound’s exchange rate this year," said Hany Farahat, senior economist at Cairo-based CI Capital Holding. "The resulting improvement in liquidity at the banks should help stabilize prices in the parallel currency market until that adjustment takes place."

Egypt’s benchmark EGX 30 Index for equities climbed 0.5 percent at the close in Cairo, trimming this year’s losses to 9 percent.

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