Central Bank lifts caps on dollar withdrawals and deposits

Importers of “necessary commodities” will no longer face limits on deposits or withdrawals of hard currency, Egypt’s Central Bank announced Wednesday.

On Tuesday, the bank eliminated these caps for private citizens. Importers of commodities deemed non-essential are still subject to limits.

The announcements are a partial rollback of currency controls imposed in February 2015, which limited deposits by individuals and companies to US$10,000 per day and $50,000 per month.

Since January, the CBE has eased the deposit cap for importers, and waived deposit limits for incoming travelers.

“The Central Bank has tried to ease those restrictions that the previous central bank governor had put in place,” said Jason Tuvey, Middle East economist at Capital Economics.

These policies aimed to eliminate the parallel currency market. By barring businesses from sourcing large sums on the black market and then depositing them into accounts, the bank hoped to deprive black market traders of customers. Instead, the pound’s value soared on the black market while businesses and private citizens face a currency crunch.

Tuvey views the decision to ease the deposit caps as a signal that the Egypt’s economic authorities are “beginning to move toward the realization that they need to let go of the pound.”

“The upshot is that firms have now been going back to the black market in order to get the dollars and deposit them into commercial banks in order to open up letters of credit,” he added. “Devaluation is now looking increasingly likely.”