Banks operating in the local market have expressed confusion in pricing their exchange rates. Most banks have imposed a wide gap between buying and selling prices over the first three days of the decision to float the Egyptian pound, which was taken by the Central Bank of Egypt (CBE) on Thursday.
US dollar trading began on Thursday at a guiding price of EGP 13 for buying, with a profit margin of 10% up and down for banks to decide. Throughout the past three days, the price of the US dollar ranged between EGP 13 and EGP 16.5.
Banks worked with this price until almost 1pm on Thursday. The US dollar price then rapidly moved to close at EGP 16 at a number of banks.
The profit margin adopted by some banks reached EGP 0.5-1 per US dollar—a very high margin compared to EGP 0.1 before the flotation.
The confusion in pricing has widened the gap between Thursday and Saturday, though the severity has fallen slightly.
CBE governor Tarek Amer said in a press conference on Thursday that the chaos is normal as the flotation of the national currency is taking place for the first time.
Haitham Abdel Fattah, director general of the treasury at the Industrial Development and Workers Bank of Egypt, said that chaos is normal during the first days of floating the pound.
He added that banks raised US dollar prices to entice dollar holders to sell to the official market instead of resorting to the unofficial one, as well as attracting dollar liquidity to cover the obligations and needs of their clients.
“We became a free market,” Abdel Fattah said. “There can no longer be talks about a unified dollar price or a stable one.”
He noted that each bank will set their own ratings according to their circumstances of supply and demand.
He expected the profit margin between the buying and selling price at banks to drop to EGP 0.1-0.15 within a matter of days.
“The old exchange rate market has gone—forever,” he stressed.