The amount of US dollar selling through banks last week has increased by $1.2bn more than normal levels, governor of the Central Bank of Egypt (CBE) Hisham Ramez announced Monday.
In a telephone interview on CBC satellite channel, Ramez explained that following the recent dollar exchange auctions, selling dollars through banks has broken a record. He added that some banks have increased their dollar exchange rate by 10 times.
Ramez also denied any relation between dollar rates and the rising prices of commodities, explaining that merchants “unjustifiably” hike prices.
“For example, the value of Egyptian pound has increased against the Euro from EGP 9.70 per €1 in July 2014 to €8.6 in the meantime. However, prices of imported items from Europe haven’t decreased,” the governor said.
According to Ramez, banks give priority to food and factory raw materials importers in providing dollars, noting they have also given priority to small-sized businesses that had imported products in ports.
“Generally, the decision comes in a favour of exporters and tourism companies,” Ramez said, stressing that the power of the black market has disappeared.
Ramez also denied any cash limits in selling dollars to banks, noting that there is only a limit in withdrawing cash, which is $10,000 per day.
After maintaining the same value at EGP 7.14 over the previous six months, the CBE announced last December that it will raise the number of weekly dollar bids.
The devaluation of the Egyptian pound started on 18 January, when $1 was equivalent to EGP 7.19, whereby it fell the following day to reach EGP 7.32. This devaluation is believed by economists to be a reassurance to foreign investors who would like to invest in Egypt using dollars. Others argued that prices of consumer goods, such as medicine, oil and some food products, will only get higher.
The General Division of Importers within the Federation of Egyptian Chambers of Commerce (FEDCOC) has reported an improvement in foreign currency reserves needed to import raw materials, factory components and basic commodities, said head of FEDCOC Ahmed El-Wakil.
The US dollar’s value is expected to continue rising, according to the expectations of the Federation of Egyptian Industries (FEI) head, Mohamed El-Sewedy, announced during a press conference last month. He added that the rise of dollar’s value will reach EGP 8 before the Economic Summit in March.