According to a report, some Egyptian banks recently informed clients who plan to travel abroad that they can now only withdraw $2,000 or less. The banks have also lowered the amount of foreign exchange that clients can withdraw when abroad. Egypt’s ongoing shortage of foreign exchange has forced some merchants to start demanding payment in dollars.
Pound Depreciation
As pressure against the Egyptian pound mounts, banks in the country are reportedly imposing limits on the amount of foreign currency travelers can withdraw before departing, or when they are abroad, a report has said. While there has been no formal announcement about the new limits, banks are said to have sent notices advising clients of the changes.
According to a Reuters report, one of these banks, HSBC, has informed its clients that the maximum amount of foreign currency they can withdraw for travel purposes is now $1,500. Before the changes, the bank’s clients could withdraw a maximum of $5,000. The report, which cites two unnamed sources, added that once abroad, clients will only be allowed to withdraw a maximum of $5,000 — down from $10,000.
At Commercial International Bank, clients intending to travel were reportedly told they could only withdraw forex which is equivalent to between $1,000 and $2,000. Another financial institution, First Abu Dhabi Bank, has reportedly lowered the withdrawal limit to the U.S. dollar equivalent of $518, or 10,000 pounds.
Egypt’s biting foreign currency shortages and the depreciating currency have prompted merchants, including real estate companies and car dealers, to start demanding payment in foreign currency. While this practice is said to be illegal, according to Ahmed Shiha, Egyptian companies doing this “are taking advantage of the circumstances and the customers’ needs for specific products.”
Interest on Savings Deposit
Instead of charging or demanding U.S. dollars, Shiha suggested indexing or linking prices to the greenback. Shiha said:
It would have been better for these companies to announce their new prices equivalent to the value of the product in dollars at the price adopted on the day of purchase or contract, rather than demanding customers pay in dollars since the banks will not accept that a customer deposits an unknown source foreign currency.
Meanwhile, another report has revealed that two of Egypt’s largest state-owned banks have now doubled the interest rate on US dollar saving certificates. While the National Bank of Egypt has said it will pay interest of about 5.5% on savings, Banque Misr announced it had increased interest paid on deposits from 2.25% to 5.3%.
The report, which relies on the testimony of two unnamed sources, suggested the increases were in response to the central bank’s call on financial institutions to introduce products that shield against currency depreciation.
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