Egypt’s exchange bureaus investigated for hoarding dollars

Egypt's General Prosecution is investigating around 15 exchange bureaus after the central bank reported them for hoarding dollars and contributing to Egypt's currency crisis, two prosecution sources told Reuters on Sunday.

Central Bank Governor Tarek Amer is battling against a black market which is sucking up hard currency liquidity from the banking sector and hurting the pound, which has weakened to record lows of LE10 per dollar versus an official rate fixed at LE8.78 per dollar.

Amer met the general prosecutor on Saturday and requested an investigation be opened targeting around 15 exchange bureaus which he accused of fuelling a dollar crisis, prosecution sources said.

"Based on his request the prosecution … requested from the unit in charge of public funds to investigate these [bureaus]," one prosecution source said.

"[Amer] accused them of causing the dollar crisis by hoarding dollars and refusing to sell, which caused a rise in the price of the dollar," he said.

Market sources say traders at exchange bureaus often do not sell at official rates, saying they do not have the dollars to sell. They then offer dollars at higher rates, unofficially, outside the exchange bureaus.

The central bank does not have an official spokesperson and officials are not available for comment.

Egypt, which relies heavily on imports, has been facing a dollar shortage since a popular uprising in 2011 drove away foreign investors and tourists, both major sources of hard currency.

The country's foreign reserves had tumbled to around US$16.5 billion in February from $36 billion in 2011.

On March 14 the central bank devalued the pound to LE8.85 per dollar from LE7.73 and announced it would adopt a more flexible exchange rate. Two days later it strengthened it to LE8.78 per dollar and has held to that rate since.

Bankers and traders on the black market say the devaluation is failing to narrow the gap between official and unofficial rates because the demand for hard currency is high and the banks do not have the dollars to meet it.

In previous attempts from the central bank to narrow the gap between official and unofficial rates, officials from the central bank met with exchange bureaus and agreed on a range to curb prices on the parallel market.

In February, the central bank revoked the licences of four exchange bureaus after the first meeting failed to cap the price of the dollar at LE8.6 per dollar.

Related Articles

Back to top button