Stability in the dollar price in early bank transactions

The Central Bank of Egypt instructed banks to close branches early, and decided to hold its foreign currency auction early on Wednesday, in anticipation of reactions to an army deadline placed on the president to heed calls for his removal and for political forces to present a roadmap out of the current crisis.

The exchange rate of the US dollar was stable at LE7.01 to buy and LE7.04 to sell, according to state owned Al-Ahram, amid declining demand for US currency.

Insiders in the Egyptian stock exchange said the demand for dollars is decreasing due to the continuing demonstrations against President Mohamed Morsi, which has prompted many businesses to reduce their activity.

Shrinking demands for the dollar pushed prices in the black market to drop to between LE7.20 and LE7.30, compared to between LE7.50 and LE7.55 earlier.

Hisham Ramez, governor of the CBE, instructed all banks operating to follow the instructions issued on 13 February 2011 after the fall of former President Hosni Mubarak. These instructions included the monitoring and prevention of the transfer of funds abroad for individuals and businesses that exceed $100,000 or equivalent, with the exception of private transfers of business operations related to imports, after the bank has ensured the validity of the documents.

The CBE pumped LE15 billion as liquidity for seven days through repurchase repo to face the crunch, compared to LE16 billion last week, a yield of 10.25 percent.

The signs of a liquidity crisis emerged again in the banking sector, after only two months of improved conditions and increased interest rates on government debt securities, which had reached their highest since the third quarter of last year.