Banks operating in the domestic market are directing foreign currencies to importers directing to secure the release of commodities retained by customs, especially perishable goods, according to Sameh Ghorab, the general manager of banking operations in the Industrial Development and Workers Bank of Egypt (IDBE).
Ghorab told Daily News Egypt that banks are keen to release such goods quickly so as to minimise the cost for importers and thus, reduce the price of goods for the consumer, as well as providing these goods to the market.
To reduce dollar shortage crisis at banks, the foreign currency deposit cap was raised to $250,000 a month for companies importing basic goods, according to Ghorab.
There has been a severe dollar shortage in Egypt since the 25 January Revolution in 2011, with the subsequent political tension and security issues driving foreign investors and tourists away from the country. US dollar reserves have been eroded in the intervening period, falling to $16.4bn.
Ghorab expects the decision to raise the deposit cap, in addition to increased tariffs on what the government has claimed are non-essential goods, including increased tariffs on feminine hygiene products, will have a positive effect on the foreign exchange market during the coming period, and will help balance supply and demand for the US dollar after the market fully accommodates these decisions.