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Monday, 17 October 2016

Industry reacts to the initiative to boycott sourcing FX from parallel market

Boycott of parallel market off to slow start? Members of the Federation of Egyptian Industries have not taken the proposed 21-day boycott of the parallel market for FX with enthusiasm for want of liquidity and fear of missing payment deadlines, FEI’s Pharma Division head Ahmed El Ezaby told Ahram Gate. Still, El Ezaby thinks the initiative will gain enough support to put a dent in the parallel market. The Food Industries Division’s Ashraf El Gazayerli echoed El Ezaby’s concerns, saying manufacturers with foreign obligations have no choice but to source FX from the parallel market. Mohamed Badran, CEO of dairy and juice producer Beyti, hit the nail on the hammer last week when he stressed the problem is availability of FX, not price.

Whether the FEI moves ahead with the initiative or not, the parallel market rate appears to have been cooled slightly this week after last week’s record spikes. Fading hype of an imminent devaluation saw the EGP hold steady at EGP 15.05-15.20 on Sunday morning, weakening to EGP 15.40 by the evening, according to Al Shorouk.

Also yesterday: The FEI signalled it will continue to push to allow those who are sourcing FX on the parallel market to record the full variance from the official rate as an FX expense. The issue is due to come up at a meeting today between the FEI and Tax Authority chief Abdel Moneim Mattar, Al Borsa reports.

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