2 banks ease credit card foreign currency limits

Two private banks operating in Egypt have eased strict limits on credit card withdrawals and purchases that were put in place to preserve scarce foreign currency liquidity in the banking system over recent years.

The move comes after a number of recent steps to address the scarcity of foreign currency and its impact on the country. Egypt received a major injection of liquidity from the United Arab Emirates under the landmark Ras al-Hikma development deal, with authorities implementing monetary tightening policies and devaluing the currency shortly afterward.

On Monday, days after the value of the Egyptian pound decreased by around 58 percent against the dollar, Commercial International Bank (CIB) raised its limits on credit cards.

CIB is Egypt’s largest private bank and one of several domestic banks that introduced varying limits on foreign currency withdrawals in 2022.

The Arab African International Bank (AAIB), a joint venture between the Central Bank of Egypt (CBE) and the Kuwait Investment Authority (KIA), reduced limits on Monday as well.

The steps come after the central bank directed local banks last week to increase the limit on foreign currency transactions on credit cards. Domestic news outlets said the step comes on the back of a recent rise in national dollar liquidity due to the inflow of an initial US$10 billion in investments within the Ras al-Hikma deal with the UAE.

The investments were followed by a historic six percent hike in interest rates and another devaluation of the Egyptian pound that saw the dollar settle at LE48.85 in the central bank and average LE49 in regular banks, rallying a little to around LE48.8 to the dollar at the time of writing.

CIB has increased limits on credit card withdrawals abroad for the second time in less than a week. Withdrawal limits now start from LE3,500 to LE10,500, equivalent to around $72 to $216 based on the exchange rate at the time of writing, and limits on monthly purchases at CIB now range from LE75,000 and LE200,000, or around $1,549 to $4,132, depending on client account criteria.

Withdrawal limits went up for AAIB clients as well, now ranging from LE10,000 to LE25,000, or the equivalent of around $206 to $516, while the monthly limit on purchases ranges from LE50,000 to LE150,000 ($1,033 to $3,099).

Several other banks have also announced increases to their limits on customer foreign currency transactions, according to domestic outlet Youm7, while all other banks are reportedly preparing to implement the central bank’s instructions to increase limits within days.

Domestic credit card transactions on foreign currency in the AAIB and CIB’s recent decisions are capped at around $1,000 per month, with the AAIB’s limit set in dollars and the CIB setting it in Egyptian pounds at LE50,000.

The directives have not been universally implemented in all banks yet, Mohamed al-Etreby, the head of Banque Misr and the Federation of Egyptian Banks, told Mada Masr last week.

Etreby explained at the time that the move will depend on each bank’s capabilities and unique circumstances, given the challenging economic conditions, adding that backlogged goods at ports and exchange rate liberalization are more of a priority.

In October 2022, the central bank instructed domestic banks to place a $250 monthly limit on domestic credit card transactions in foreign currency.

Banks were also instructed in 2023 to stop allowing the use of prepaid cards in international transactions, whether for cash withdrawals outside the country or foreign currency purchases online. The use of credit cards for foreign currency transactions domestically or abroad was also restricted to “speculators misusing these cards by making cash withdrawals from abroad without actually traveling,” the central bank said in a statement at the time.

In January, the central bank further tightened its limit for purchases outside Egypt, capping it at approximately $500 instead of the previous $1,600, while limits on cash withdrawals abroad were reduced to approximately $60.