The unofficial foreign currency exchange market in Egypt has been hit hard as the Central Bank of Egypt (CBE) increases its inspections of exchange bureaus in an attempt to control prices of the dollar. The US dollar reached a record high of LE10.5 in the black market against the pound early this week, before the pound gained some ground and settled at LE10 on Tuesday. The official price of the dollar against the pound is currently LE8.88, reached on 17 March after the CBE decided to devalue the national currency from LE7.83 in an effort to lessen the gap between the official and black market rates which were close to LE10 before the devaluation. A lack of foreign currency resources and pressure by importers on the dollar led to the fall of the pound, which became unavailable in sufficient quantities at the banks. This has led importers and others who need foreign currency to go to exchange bureaus that are willing to sell dollars at a higher rate. Since the dollar is always in demand, the unofficial rates continue to go up. The exchange rate of the pound against the dollar went down a little this week following a meeting on Saturday between CBE governor Tarek Amer and Attorney General Nabil Sadek. The Al-Wafd daily quoted sources from Sadek's office as saying that Amer had given the attorney general documents proving the deliberate manipulation of the foreign exchange market by some bureaus. Amer has announced on several occasions lately that foreign exchange bureaus selling currencies at unofficial rates will be shut down. Several foreign exchange companies have already been closed after CBE inspections proved they were buying and selling currencies at unofficial rates. According to the CBE, there are 111 exchange bureaus operating in Egypt. “Many companies have temporarily halted their operations out of fears of being closed down,” said Mohamed Al-Abyad, head of the exchange division at the Federation of Egyptian Industries. Exchange companies are allowed by the CBE to sell dollars at LE0.10 more than the official rate, but many bureaus are going way above this. Al-Abyad stressed that he believed exchange bureaus had nothing to do with the current dollar crisis, which he thought should not be blamed on a single party. He added that he was not sure if Amer had discussed a crackdown on exchange companies, but said he was not against that if the companies were found to have been behind the dollar crisis. He said that this week's fall in prices for the dollar on the black market was due to a slight decrease in demand. “As we approach the end of the fiscal year in June, demand will go up,” he added. Demand for the dollar is mainly driven by investors who have suffered for months from a ceiling imposed by the CBE on foreign currency deposits that was lifted last month. The ceiling had prevented individuals from depositing more than $10,000 a day or $50,000 a month and $250,000 a month for companies. Hassan Hosni, an importer of home accessories and sanitary products, stressed that the banks could not meet all of importers' dollar needs, and the latter had had to go to foreign exchange companies. “We are suffering from serious losses as a result of the dollar crisis, and products will have to become more expensive for the end consumer in order to cover such losses,” he said. CBE officials, including Amer, have announced on several occasions that the banks will make dollars available to cover all importers' needs, but until now they have failed to do so. “That is why importers have no choice but to buy dollars at a higher-than-official rate from the black market,” Hosni said, adding that the CBE had to figure out a way to solve the dollar dilemma and eradicate the black market.
