The banks operating in the local market obtained about $26.8bn from the Central Bank of Egypt (CBE) to finance the import of basic commodities from 30 December 2012 until 19 July 2016, according to a survey conducted by Daily News Egypt.
The CBE started at the end of 2012 to sell the US dollar to banks through foreign exchange auctions, so as to provide the banks’ customers with their foreign exchange needs.
The CBE launched 462 regular auctions since that date with a total of $19.382bn. It also launched nine exceptional auctions worth $7.397bn, according to the CBE’s website.
Although the CBE has held 503 regular auctions to sell the US dollar up until last Tuesday, the number of US dollar auctions registered on the bank’s website is 462 tenders, according to a survey conducted by DNE.
The CBE started by holding three weekly auctions worth about $75m each. In February 2013, the CBE cut the value of those auctions to $40m each.
When the US dollar crisis increased, the CBE in January 2015 increased the number of US dollar auctions to four times a week, worth a total of $160m per week. In May 2015, the CBE reduced them again to three weekly auctions worth only $120m because of the decline in foreign exchange reserves.
In March 2016, the CBE decided to launch one auction on Tuesday of each week worth $120m.
The CBE issues these auctions on two systems. The first is the quota system, where each bank gets a specific share of each auction. The second system is granting the US dollar for specific banks regardless of the quota system.
According to the CBE’s instructions issued in 4 February 2013, the US dollar bids obtained by the banks are directed to cover the import of seven basic commodities.
Those commodities include food, machinery, production equipment and spare parts, intermediate goods and raw materials, and petroleum products and their derivatives.
They also include medicines, vaccines, chemicals, fertilisers, pesticides and their accessories, and industrial oils and greases.
The food commodities include tea, meat, poultry, fish, wheat, oil, milk powder, children’s formula, soy, lentils, butter, and corn.