Black market dealers not to sell dollars after cap on cash deposits
Egypt Central Bank - YOUM7 (Archive)

CAIRO: Black market traders have refrained from selling the U.S. dollar starting Thursday, after receiving another tough blow from the Central Bank of Egypt (CBE), which imposing a $10,000 daily ceiling for cash deposits in hard currency for both individuals and companies.

Meanwhile, one can sell the dollar at 8.82 EGP on the black market Saturday, a black market dealer told The Cairo Post.

The Egyptian pound stabilized at 7.53 per U.S. dollar at a regular central bank auction Thursday for a third consecutive day, after 10 depreciations in a row since Jan. 18. It remains the lowest level the local currency was allowed to reach since auctions started in December 2012.

The bank’s Wednesday’s decision came few hours after Youm7 published an exclusive report that Egypt will receive $10 billion in deposits from Saudi Arabia, Kuwait and the United Arab Emirates prior to the country’s Economic Development Summit scheduled in March.

“Deposits from the Gulf states would save cash liquidity in dollars which enables the central bank from defeating the parallel market in the short-term,” banking expert Khaled Ateya told The Cairo Post.

“The pledged deposits are separate from investments the three countries are going to put forward at the summit,” top government sources told Youm7 Wednesday.

Egypt hopes the long-awaited economic conference will lure fresh investments worth billions of dollars to boost its limping economy hit by political turmoil since the January 25 Revolution.

In 2013, the three gulf nations pledged $12 billion to Egypt in cash aid, deposits and petroleum shipments to support its economy after the military ousted President Mohamed Morsi following mass protests against his regime the same year.

Meanwhile, Ateya criticized imposing a cap on cash deposits in dollar from businesses as investors do not prefer countries placing restrictions, but he reiterated that it was another “strong blow” against the balck market.

Central bank has succeeded in reducing the dollar price gap in the official and parallel markets, said Ateya, urging the CBE to raise interest rates for local currency deposits to encourage people put their saving in local banks.

“This will help reduce cash liquidity and possible inflation hikes, while controlling dollarization at the same time,” the expert concluded.

In a step to tighten its grip over dollar trading on the black market, the Central Bank, the auctions of which determine the rates banks sell the dollar to clients, widened the range in which banks can trade dollars last week to 10 piasters above or below the official rate, up from 3 piasters.

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