Back to the complete issue
Wednesday, 10 August 2016

CBE keeps FX rate unchanged, Parliament adds harsher prison sentences for FX traders

The central bank kept the exchange rate stable at EGP 8.78 per USD 1 at yesterday’s weekly FX auction, where it sold USD 117.9 mn. The funds were earmarked again to clear a backlog of pharma and infant formula imports, Al Mal writes, quoting a banking source. The paper adds that, according to its sources, the parallel market has the exchange rate at EGP 12.60 per USD 1 whereas Reuters cites the rate at EGP 12.65 per USD 1.

Black market players could face additional jail time: The House of Representatives zeroed in on the parallel market yesterday, voting extend the minimum jail term for anyone convicted of “manipulating the FX market” or selling foreign currency in the parallel market. The amendments to the Banking Act (law 88 of 2003), recommended by the CBE, will see jail terms rise to 3-10 years from a previous minimum of one year and fines capped at EGP 5 mn, Al Masry Al Youm reported. The amendments target articles 113, 117, and 116 of the law, which restrict transfers abroad of FX to CBE-certified banks, require banks and FX bureaus to submit periodical reports to the CBE on FX activity, and enforce declarations of FX by travellers. The amendments to the banking act have been picked up by Bloomberg and Reuters in English.

Abdel Aal didn’t try to shutter exchange bureaus? Meanwhile, House Economics Committee Chairman Ali El Moselhy denied widespread news reports that House Speaker Ali Abdel Aal had attempted to introduce a law that would kill FX bureau activities, Al Mal reports. He added that discussions did focus on “criminalizing certain transactions by some FX exchanges,” but did not specify what those were. Some 47 FX exchanges have been shuttered on allegations of trading in the parallel market.

Meanwhile, Federation of Egyptian Chambers of Commerce head Ahmed El Wakeel rejects the notion that the CBE’s crackdown on FX offices helped stabilize the parallel market rate. He continued to blame statements by CBE Governor Tarek Amer on FX for the EGP’s slide over the past month, urging Amer to adopt back a full float of the EGP, Al Mal reports.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.