Damage has been done, say bankers

Egyptian president sets new foreign currency limit

GMT 14:54 2012 Friday ,28 December

Arab Today, arab today Egyptian president sets new foreign currency limit

Experts believe Central Bank is losing control of exchange rate
Cairo - Mohamed Salah

Experts believe Central Bank is losing control of exchange rate Egypt's president Mohammed Morsi has issued a decree modifying certain provisions of the Central Bank's law, which was issued by regulation 88 in 2003. The decree removes and replaces the first and third provisions of Article 116 in the law. The first provision limits the amount travellers to and from Egypt are allowed to carry, to $10,000 or its equivalent. The second provision bans foreign currencies from entering or leaving Egypt, by postal consignments and parcels.
An official at Central Bank said that the institution is committed to ensuring deposits in local and foreign currency are available at all banks operating in Egypt, pointing out that banks can ensure the fulfilment of any obligations towards clients.
Economist Mohamed Farouk thinks that the presidential decree comes too late, because the previous monetary policy has led to billions being wasted already. "Customers have already taken out their cash and started exchanging it into dollars, in anticipation of an increase in value. This has led to the lack of dollars and put both banks and exchange companies in trouble," Farouk explained.
He added that the Central Bank is losing control over the exchange rate, which would consequently lead to a substantial increase in the price of the dollar, against the pound. "All global financial institutions are expecting that to happen now, especially after the downgrading of Egypt's major government banks, which will lead to an increase in prices of imported goods," he said.

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