Customs exchange rate raised
Gov’t hikes customs exchange rate: The Customs Authority yesterday raised the USD customs exchange rate to EGP 18.65 from EGP 17.00 in May, it said in a statement. This brings it almost in line with the official exchange rate of EGP 18.66.
The customs rate has been fixed since March: The government re-introduced the monthly customs exchange rate in March after the central bank allowed the EGP to fall 16% against the greenback. The rate was set at EGP 16.00 for imports of basic commodities and materials used for manufacturing.
EGP WATCH- The EGP has now fallen 18% against the USD since March after slipping to EGP 18.66 yesterday.
Bad news for prices? The decision “will have a direct impact on inflation,” Beltone’s Alia Mamdouh told Bloomberg Asharq yesterday.
Cars could get even pricier: Cars from Europe and Asia will be 2% more expensive as a result of the move, while cars from elsewhere will become 6.5% pricier, Alaa El Saba, member of the automotive division at the Federation of Egyptian Chambers of Commerce, told Asharq.
Price increases could be purely academic considering that some importers are struggling to get goods into the country in the first place. Some foreign car manufacturers have suspended sales to Egypt after the switch to using letters of credit (L/Cs) left local dealers unable to purchase vehicles, leaving around 29k vehicles stranded in Egyptian ports.
An official at one high-profile auto dealer we spoke with yesterday said they have zero stock, no visibility on when they would get cars in stock, and that most staff salaries have not been paid in the past two months.
“The biggest problem is that we cannot import now because of banking complications and the lack of easily obtainable hard currency," an anonymous major importer of household appliances told Bloomberg Asharq. The shortage of inventory in some markets became much worse after new rules were handed down in March requiring importers to use letters of credit (L/Cs) to purchase goods, instead of documentary collection, a quicker, more accessible, and less capital-intensive way of facilitating trade.