CBE requests banks refuse USD deposits of unknown origin from companies
The Central Bank of Egypt has verbally instructed banks to refuse USD deposits of unknown origin from companies, an unnamed official told Al Borsa. The move comes as the CBE tightens its grip on parallel market transactions. The request essentially asks the banks to eliminate an article in the client’s credit note that allows for arranging USD liquidity of unknown origin if the bank is unable to provide the liquidity. The question at the moment, as the banking community sees it, is whether this is a move to choke imports or to increase FCY inflows into the banking system: The instructions yesterday do not preclude bankers from buying undocumented USD, meaning a client could conceivable sell the FX to the bank and then enter the normal queue to buy it back in the form of a letter of credit. Also yesterday, the CBE has asked banks to use variable pricing on short term loans, and three and five-year loans to financial leasing companies, which calculates return every year as opposed to a fixed rate.