For a period of time, Egypt was one of the countries that spent the most on foreign currencies, especially the dollar. Unfortunately, this dollar often went to importing goods and needs that were very easy for Egypt to manufacture or dispense with importing at all… I wonder how Egypt has a large amount of dollar spending… and how did this help Egypt? In rationalizing the consumption of the dollar
For a long period of time, Egypt has been suffering from the import of a very large number of goods, and the import bill reached 100 billion dollars at one time, with international prices rising in an unprecedented manner, and this import was a factor of intense and strong pressure on the banks to obtain the dollar, and that is why, at one point in time, the state took a decision. By setting special requirements and instructions for disbursing the dollar.
Ok, what are the decisions that Egypt took to rationalize withdrawing and spending the dollar?
The Central Bank of Egypt, at one time, took more than one decision to rationalize dollar spending, and this was due to the decline in Egypt’s foreign exchange reserves, which reached $33.1 billion in September 2022, compared to about $45 billion in February of the same year.
The Central Bank in this period, due to the decline in foreign reserves, decided to set a ceiling for withdrawals in dollars from abroad, as an attempt to preserve the hard currency by limiting the withdrawal of dollars from the country abroad. This was one of the measures that the Egyptian state took in the period that was after the first decision to liberalize Egyptian pound exchange rate in 2016.
The main reason for the Central Bank’s decision to set a ceiling for dollar withdrawals was due to the presence of manipulation by some citizens who were spending the dollar at its official price in banks and then selling it on the black market at a higher price than its official price in order to benefit from the price difference, especially since the period during which Egypt was witnessing a significant increase. In withdrawing US dollars from abroad, the withdrawal rate reached 100%, and this is what prompted Egyptian banks to put an end to dollar withdrawals from abroad.
Egyptian banks at that time did not set any conditions for dollar withdrawals for customers who had accounts in dollars in Egypt, and withdrawal procedures were only applied to customers who had bank accounts in Egyptian pounds and wanted to withdraw in dollars while they were outside Egypt.
During this period, the Central Bank did not set limits on dollar withdrawals. Withdrawals varied depending on the bank cards, and reached $20,000 per month. Treatment and study abroad were considered cases excluded from the withdrawal limits after studying each case.
Ok, how do customers who have a dollar account withdraw from it outside Egypt?
All customers who have accounts in dollars, banks have given them the right to withdraw cash from ATMs if they are outside Egypt in the same currency of the country in which the customer is located. After that, banks do something called a clearing in order to pay the value of withdrawals to foreign banks in US dollars, and this was the main reason for The impact on the stock of the US dollar in Egypt.
What the Central Bank did at the time was very important to stop the bleeding of the dollar and trading in it and allowed the availability of the dollar. After that, the Central Bank took other decisions to increase the dollar’s collection, and the most important decision was to shake the float of the pound and eliminate the parallel market for the dollar, and this is the decision that opened the door to the end for the flow of direct and indirect foreign investments into the market. In this way, the Egyptian Central Bank was able to save the banking market from currency gangs and the plan that was being carried out in parallel to dry up the dollar from the Egyptian market and the banks, and we all know, of course, who is behind this plan.
