15:16
Monday 10 October 2022
I wrote – Manal Al-Masry:
In early October, the Central Bank allowed banks to adopt a package of measures in an attempt to correct the current situation and tackle the dollar shortage crisis, which suffered from the negative consequences of the Russian-Ukrainian conflict on world economies.
Measures to address the currency shortage crisis included restricting a number of banks to limits on cash withdrawals on currency outside Egypt using bank cards, starting this week.
Al-Ahly Bank and Egypt also announced to raise the interest rate on dollar certificates for the first time in about 6 years, with a 3.05% increase to reach 5.30%, starting yesterday, Sunday. , instead of the previous 2.25%, in line with global changes after the Federal Reserve (the Central Bank of the United States) raised interest rates on the dollar, which in the last 5 meetings reached 3.35% today.
While the rest of the banks are studying raising the interest rate on dollar currency certificates and issuing new dollar deposits at a high interest rate, following the decision of the domestic and Egyptian banks in an attempt to compete for savings in US currency and private banks may not be able to compete with the high interest offered by the two largest government banks, according to sources who spoke to Masrawy.
Two weeks ago, Central Bank Governor Hassan Abdullah held a meeting with banks’ international transactions and treasury departments to discuss a range of practices, including setting up controls for off-site cash withdrawals. of Egypt using the cards and setting up a specific and binding mechanism for all to evaluate the interest on dollar savings vessels after raising it globally.
The banks’ decision to limit cash withdrawals outside Egypt came after the discovery of unusual practices and the misuse by some customers of direct debit cards linked to the customer’s “Debit” or credit account. “credit card” purchases from outside Egypt on withdrawals and purchases, which may suggest the existence of currency manipulation, which prompted him to study these operations to scale through new instructions.
In the second week of October, banks decided to reduce limits for overseas cash withdrawals using direct debit cards linked to the customer’s account and credit, known as ‘Crit Cards’, and prepaid, in an attempt to stop abuse by some customers.
Rates of reducing limits on cash withdrawals and purchases varied from bank to bank.At a time when Banque Misr reduced cash withdrawal limits by more than 90% from previous maximum limits, the National Bank reduced the limits by 50% while maintaining the purchase limits.
However, the National Bank’s reduction of cash withdrawal limits outside Egypt by a lower percentage than Banque Misr does not mean more flexibility, but this reduction will be somewhat in line with the same amount of allowable amounts. for the customer in Banque Misr when it equates to $ 500 for the ordinary customer.
Banks allow their customers to use their bank cards outside Egypt of their three different types (debit card, credit card and prepaid card) denominated in Egyptian pounds to buy or withdraw cash in the same country’s currency in which the customer is located via a global SWIFT system that allows the exchange of any currency of the card to the same currency as the country in which the customer is located in exchange for a deduction of fees and commissions for the availability of the service.
In addition, the Central Bank is preparing to launch new financial instruments that help prevent the risks of currency fluctuations, as sources in charge of some banks, that the Central Bank directed the banks, told Masrawy earlier in a meeting with them. in recent days, to prepare for the launch of new financial derivative instruments for customers, to protect them from the risk of exchange rate fluctuations for a certain period of time.
According to sources, the Central Bank has identified 5 financial derivatives to hedge the risks of currency fluctuations and interest rates, namely (IRS), (SWAPS), (Options), (FWD) and (NDF).
For his part, Hani Genena, an economist and lecturer at the American University, told Masrawy that the banks’ decision to limit cash withdrawal limits outside Egypt is a temporary measure until the completion and completion of the International Monetary Fund loan with Egypt, then the restrictions will be lifted as previously by lifting the restrictions 6 months after the exchange rate liberalization in November 2016, so clients understood the meaning of the decisions and understood them.
Six years ago, the Central Bank monitored, according to Tarek Amer, the former Governor of the Central Bank of Egypt, in statements to CNN in Arabic in June 2016, the misuse of debit cards by speculators in the Egyptian pound. abroad.
At that time, the Central Bank asked banks operating in Egypt to monitor and regulate the use of payment cards outside the country and cancel the cards of those who misused them in currency speculation, after noticing the levy. of hundreds of millions of dollars when using cards overseas, indicating the existence of manipulation and exaggerated use by some for purposes other than travel and tourism, and used in commercial matters.
Banks continued to lift restrictions on cash withdrawals outside Egypt during 2017, following the elimination of dollarization and Egypt’s signing of an agreement with the International Monetary Fund worth $ 12 billion. to implement the economic reform program, which ended in 2019 with the entry of the last tranche of the loan.
Hani Geneina explained that the positive impact of the banks’ recent decisions to reduce withdrawal limits outside Egypt or raise the interest rate on dollar certificates is represented in the contribution of these decisions to reducing pressure on the dollar from only one side, namely the individual dealers, and this segment has low transactions.
He stressed that, at the same time, these measures will not solve the dollar demand crisis, which comes mainly from companies that need millions of dollars, which leads to speculation.
He expected these exceptional measures to end 6 months after Egypt began receiving the IMF loan, as it has previously.
Finance Minister Mohamed Maait said in press statements last month that the government hopes to reach an agreement with the International Monetary Fund within one and two months.
Mohamed El-Etreby, president of Banque Misr and president of the Union of Arab Banks, said in a telephone interview with the “On My Responsibility” program on Sunday evening that the banks’ decisions to limit the cash withdrawal limit Foreign currency out of Egypt came after monitoring card misuse by some customers with withdrawals above natural rates.
El-Etreby was expecting strong demand from citizens for dollar certificates after increasing the yield by approximately 100%, compared to the previous one, in line with the increase in interest rates globally, as the certificate was offered for periods of 3 or 5 years and granted quarterly, half-yearly and annual returns.
As for Egyptians abroad, he explained that they have been presented with a certificate with the name “My Country”, and the performance will be equally adequate for Egyptians at home, pointing out that it is difficult to distinguish between Egyptian who lives abroad and what lives at home in the certificates. However, we will work to add some advantages to Egyptians abroad.
