03:16 PM
Monday 10 October 2022
I wrote – Manal Al-Masry:
During the first days of October, the Central Bank allowed banks to take a package of measures in an attempt to correct the current situation and confront the dollar shortage crisis, which was affected by the negative consequences of the Russian-Ukrainian conflict on the world’s economies.
Measures to confront the currency shortage crisis included limiting a number of banks to the limits of cash withdrawals on currency outside Egypt using bank cards, starting this week.
Al-Ahly Bank and Egypt also announced raising the interest rate for the first time in about 6 years on dollar certificates, with an increase of 3.05% to reach 5.30%, starting from yesterday, Sunday, instead of 2.25% previously, in line with global changes after the Federal Reserve (the US Central Bank) raised interest rates on the dollar. The dollar in its last 5 meetings to record 3.35% currently.
While the rest of the banks are studying raising the interest rate on certificates in the dollar currency and issuing new deposits in dollars at a high interest rate, after the decision of the National and Egypt banks in an attempt to compete for savings in the American currency, and private banks may not be able to compete with the high interest offered by the two largest government banks, according to sources who spoke to Masrawy.
Two weeks ago, the Governor of the Central Bank, Hassan Abdullah, held a meeting with the international transactions and treasury departments in the banks to discuss a number of files, including setting controls for cash withdrawals outside Egypt using cards, and setting a specific and binding mechanism for everyone to rate interest on savings vessels in dollars after increasing it globally.
The banks’ decision to limit cash withdrawals outside Egypt came after discovering unusual practices and misuse by some customers of direct debit cards linked to the customer’s account “Debit” or credit for “credit card” purchases from outside Egypt on withdrawals and purchases, which may suggest the existence of currency manipulation, which prompted it to study Scale these operations via new instructions.
During the second week of October, the banks decided to reduce the limits for cash withdrawals abroad by using direct debit cards linked to the customer’s account and credit, known as ‘Crit Cards’, and prepaid, in an attempt to stop misuse by some customers.
The rates of reducing the limits on cash withdrawals and purchases varied from one bank to another. At a time when Banque Misr reduced the cash withdrawal limits by more than 90% compared to the previous high limits, the National Bank reduced the limits by 50% while maintaining the purchase limits.
However, the National Bank’s reduction of the cash withdrawal limits outside Egypt by a lower percentage than Banque Misr does not mean more flexibility, but this reduction will be in line with the same amount of amounts allowed for the client in Banque Misr to some extent when it is equivalent to 500 dollars for the ordinary client.
Banks allow their customers to use their bank cards outside Egypt of their three different types (debit card, credit card and prepaid card) denominated in Egyptian pounds to buy or withdraw cash in the currency of the same country in which the customer is located through a global SWIFT system that allows exchanging any card currency in the same currency of the country in which the customer is located in return for a commission deduction and fees for service availability.
In addition, the Central Bank is heading to launch new financial tools that contribute to preventing the risks of currency fluctuations, as responsible sources in some banks told Masrawy earlier, that the Central Bank directed the banks, during a meeting with them in the past days, to prepare to launch new financial derivative tools for clients. To protect them against the risk of currency exchange rate fluctuation for a specified period of time.
According to the sources, the Central Bank has identified 5 financial derivatives to hedge against currency and interest rate fluctuation risks, namely (IRS), (SWAPS), (Options), (FWD) and (NDF).
For his part, Hani Genena, an economist and lecturer at the American University, told Masrawy that the banks’ decisions to limit the cash withdrawal limits outside Egypt is a temporary measure until the completion and completion of the International Monetary Fund loan with Egypt, then the restrictions will be lifted as happened earlier by lifting restrictions after 6 months from the liberalization of the exchange rate in November 2016, so the customers understood the significance of the decisions and understood them.
Six years ago, the Central Bank monitored, according to Tarek Amer, the former governor of the Central Bank of Egypt, in statements to CNN in Arabic in June 2016, misuse of debit cards by speculators in the Egyptian pound abroad.
At the time, the Central Bank demanded that banks operating in Egypt monitor and regulate the use of payment cards outside the country and cancel the cards of those who misused them in currency speculation, after noticing the withdrawal of hundreds of millions of dollars when using cards abroad, which indicates the existence of manipulation and exaggerated use by some for the purposes of Different from travel and tourism, and used in commercial matters.
Banks continued to cancel the restrictions on cash withdrawals outside Egypt during 2017, after the elimination of dollarization and Egypt’s signing of an agreement with the International Monetary Fund worth $12 billion to implement the economic reform program, which ended in 2019 with the entry of the last tranche of the loan.
Hani Geneina explained that the positive impact of the recent banks’ decisions to reduce withdrawal limits outside Egypt or increase the interest rate on dollar certificates is represented in the contribution of these decisions to reducing pressure on the dollar from only one side, namely individual dealers, and this segment has low transactions.
He pointed out that at the same time, these measures will not solve the dollar demand crisis, which comes mainly from companies that need millions of dollars, which leads to speculation.
He expected that these exceptional measures will end 6 months after Egypt begins receiving the IMF loan, as happened earlier.
Finance Minister Mohamed Maait said in press statements last month that the government hopes to reach an agreement with the International Monetary Fund within one and two months.
Mohamed El-Etreby, President of Banque Misr and President of the Union of Arab Banks, said, during a telephone interview with the “On My Responsibility” program, on Sunday evening, that the banks’ decisions to restrict the cash withdrawal limit in foreign currency outside Egypt came after monitoring the misuse of cards by some customers with withdrawals higher than the rates. natural.
El-Etreby expected a high demand from citizens for dollar certificates after raising the return on them by about 100%, compared to the previous one, in line with raising interest rates globally, as the certificate was offered for periods of 3 or 5 years and granted quarterly, semi-annual and annual returns.
As for the Egyptians abroad, he explained that there was a certificate presented to them under the name “My Country”, and the return on it will be adjusted in line with the same for Egyptians at home, stressing that it is difficult to distinguish between the Egyptian who lives abroad and the one who lives at home in the certificates. But work will be done to add some advantages to Egyptians abroad.