The Central Bank of Egypt’s decision to raise the dollar deposit to $250,000 from the previous $50,000 limit falls short of the necessary measures to stimulate an improvement in the commodities import market, according to Ahmed Sheha, head of the importers division of the Cairo Chamber of Commerce.
Sheha said that “this [the decision] is nothing but a slight improvement of an already detrimental decision”.
In early 2015, the Central Bank of Egypt (CBE) limited the cap on dollar deposits, imposing a maximum deposit of $ 10,000 per day and $50,000 per month, arguing that this decision would eliminate the black market in foreign currency exchange.
The decision was met with criticism from importers who believed that such a step would harm their businesses. Importers of non-basic commodities stated that this decision limited their ability to finance import operations, especially since banks do not finance the import of such commodities.
“After the bank set the 50,000 limit, importers warned of negative reactions such as an increase in prices, an unavailability of certain products, and a surge in dollar value,” Sheha said. “Such decisions make people feel unsafe about their saved dollars and instead of depositing them in bank account they keep them or deal in the black market.”
Despite this decision, the United States dollar’s value against the Egyptian pound continued to appreciate. Sheha noted that even after raising the cap, the gap in the exchange value between the dollar and pound will continue to widen.
“After [the latest] decision to raise the deposit cap, the dollar still increased and reached EGP 8.6 in the unofficial market,” he added.
On 14 January, Chairman of the Federation of Egyptian Industries (FEI) Mohamed El- Sewedy told Daily News Egypt that the foreign currency deposit cap for industries is expected to be raised soon and should be completely removed by the end of 2016.
However, Minister of Investment Ashraf Salman, a member of the Coordinating Council for fiscal and monetary policies, said that it is unlikely that the cap on dollar deposits will be raised during the current period as it was not issued in the Coordinating Council agenda.
Sheha said that the decision provides unfair preferential treatment for certain imports while raising the financial threshold for a significant number of others.
The bank’s decision applies exclusively to companies that import basic rations or food commodities, machinery, production equipment and spare parts, intermediate goods, production inputs, raw materials, medicines, vaccines, and chemicals needed for their industries.
