Decline in Demand for Dollars in Egypt Sparks Calls for Change

2023-09-03 10:12:00

Dollar and Egyptian pound (AP)

dollar

Significant drop in demand from importers

Cairo – Khaled Hosni

Posted on: September 03, 2023: 02:12 PM GST Last updated: September 03, 2023: 02:37 PM GST

Calls for quickly getting rid of the dollar in Egypt expanded with the decline in demand from importers and their weak reliance on the black market for exchange, which caused confusion among currency speculators and prompted them to deal with caution among the majority of dealers.

During the past days, the pages that follow the exchange rates in the parallel market on social media have seen many publications calling on members of these pages to quickly get rid of the dollar, and this coincided with the decline in the price of the US currency to levels between 38 and 39 pounds in recent transactions. I hit 41 pounds during the last week of August.

Informed sources revealed to Al Arabiya.net that a large number of Egyptian banks have begun to provide dollars to importers, but according to certain conditions, which made it easier to obtain the necessary amounts to finance import operations.

On the other hand, the official exchange market is witnessing a state of calm and stability, and there has been no change in exchange rates since the recent devaluation of the Egyptian pound in January.

Since the beginning of last August, the Egyptian authorities have expanded their monitoring of the black currency market, and announced the arrest of a large number of traders and speculators, which caused stagnation in the parallel market.

A few days ago, sources had revealed to local media that a number of Egyptian banks had begun procuring foreign currency for non-exporting companies – which do not have an export quota – in order to import production requirements or fully manufactured goods from abroad. Banks stipulate that these companies assign foreign currencies to them, close to what the bank will procure for them later, without asking the companies about the source of the currency.

It is mentioned that according to the rules of the Central Bank of Egypt, it is not accepted to open letters of credit for import except by paying the value of shipments from the proceeds of exports and disclosing the source of currencies.

A member of the Federation of Egyptian Industries, Kamal El-Desouki, said that the process of procuring the hard currency needed for import has undergone a major change, explaining that the period witnessed a great scarcity in dollar liquidity needed for the needs of manufacturers and importers, as banks used to manage foreign currency only for food and strategic commodities, then spare parts and other things. production requirements.

He explained in an interview with Al-Arabiya last August that banks were not managing foreign currency to import goods that were seen as unnecessary or essential, but the matter has now changed after the availability of sources of foreign currency from exporting companies and they have a surplus of foreign exchange that enables them to meet the needs other companies in the market.

He pointed out the possibility of companies with exporting dollar surpluses agreeing with other importing companies to procure the dollar by assigning it to the bank, and that the exporting companies did not have a problem in procuring the dollar to import production requirements or raw materials in the last period.

He said that the scarcity of hard currency created an accumulation of goods and commodities in the ports that the companies had imported and were unable to remove them from the ports due to the lack of dollars.

He pointed out that things have been going well for about a month regarding the customs release of goods and merchandise in the ports, and a large number of goods have been leaving the ports.