CBE issues regulatory controls for forward exchange contracts at banks

The Central Bank of Egypt (CBE) issued on Thursday the regulations of forward exchange contracts at banks operating in Egypt.

The Central Bank of Egypt (CBE) issued on Thursday the regulations of forward exchange contracts at banks operating in Egypt.
The new controls allow banks to carry out forward exchange operations for corporate clients, to hedge against risk as they protect customers from unexpected or adverse movements in the currencies' future spot rates.
The Central Bank of Egypt clarified in a letter sent to banks on Thursday that these operations include documentary credits, collection documents, supplier facilities, transfers of profits of foreign shareholders abroad with a fixed date, and proceeds of commodity and service exports received by the bank's customers, provided that the bank obtains a proof that the transaction is commercial taking into account that customers are not allowed to carry out such operations for speculative purposes.
The CBE also decided to allow banks to carry out forward exchange operations with local banks for non-speculative purposes, provided that their purpose is to protect customers from unexpected or adverse movements in the currencies' future spot rates.
The CBE clarified that it abolished the ban on carrying out any non-deliverable forward exchange operations for clients from banks, institutions or individuals, and allowed banks to carry out non-deliverable forward exchange operations for corporate clients only to protect them from unexpected or adverse movements in the currencies' future spot rates.