Playing a game of ‘cat and mouse’ is what exactly the Egyptian Central Bank and the U.S. dollar are doing nowadays. The dollar’s exchange rate hikes, the Central Bank accordingly resort to a new mechanism to control the exchange rates. The prices tend then to stabilize for a while until the U.S. currency rises again driving the central bank towards adopting a new system.
Since holding the office of Egypt’s Central Bank Governor in 2003, Dr. Farouk El-Okdah has adopted multiple systems ; Interbank rates, US dollar-denominated bills, and the recently-applied FX Auctions which aim to provide dollar liquidity, lessen the manipulations and control the U.S. dollar’s hike.
Much more recently, the Egyptian presidency has issued a decree prohibiting the Egyptians to travel abroad holding more than US$ 10 thousand. In addition, Egypt’s Central Bank has resorted to obtain dollar-dominated deposits from a number of countries, notably Turkey and Qatar. The CBE has obtained deposits from Turkey and Qatar worth more than US$5 billion to overcome the country’s economic challenges. Yet, those recent measures were useless failed to solve Egypt’s economic crisis.
Despite the Central Bank’s multiple various mechanisms, the exchange rates of the U.S. dollar continues to hike recording EGP 6.76 in foreign exchange firms on Tuesday and the manipulations also go on; but becoming less than before.
‘Amwal Al Ghad’ has asked a number of banking experts about the real reasons behind the dollar’s hike despite the CBE’s multiple procedures.
Basant Fahmy, banking expert and former adviser to Al Baraka Bank, said the lack of having a clear mechanism to support the country’s foreign reserves and control the imports which depletes most of the country’s dollar liquidity.
Fahmy further noted that Egypt would be in serious trouble if it did not have remittances from Egyptians living abroad – which reached a record US$19 billion, alongside the revenues of exports and Suez Canal.
