A total of 53 foreign exchange bureaus have been closed since the start of the year, deputy governor at the Central Bank of Egypt (CBE) Gamal Negm said on Friday. The CBE has closed a large number of the countries' foreign exchange offices, which it blames for growing pressure to devalue the currency. Egypt, which relies heavily on imports, particularly of foodstuffs, has been suffering a severe shortage of US dollars in the wake of political and security unrest that has scared off tourists and foreign investors, two major sources of hard currency. Driven by the shortage, rates on the black market exceed 12.65 to the dollar while banks kept the pound steady at 8.88. Negm said during the Union of Arab Banks Forum currently held in Sharm El-Sheikh that penalties are directed towards companies that were found guilty of manipulating and speculating on the price of the US dollar in the country's parallel currency market. The CBE's deputy governor said that they hold daily inspection campaigns on exchange bureaus to detect violators. On Aug. 9, Egypt's parliament ratified cabinet's bill to set prison sentences of up to 10 years and fines of up to EGP 5 million for traders selling foreign currency at black market rates. “A total of 53 exchange offices have been shut since the beginning of the year; licenses of 26 companies were revoked while 27 offices were suspended for a period between three months to a year,” Negm said. The total number of foreign exchange bureaus licensed to operate in Egypt was 115 at the end of last year, but now there are only 62. The central bank has devalued the local currency by 13.5 percent to register EGP 8.78 to the dollar in mid-March, but the devaluation has not crushed the burgeoning black market. Last week, Egypt and International Monetary Fund (IMF) reached an initial agreement on a $12 billion fund facility over three years, which is expected to be approved by the fund's executive board in the coming weeks. Years of political turmoil led to a drop by more than a half of Egypt's foreign reserves ($15.536 billion in July) in the years following the popular uprising in January 2011, which ended the rule of President Hosni Mubarak.
