A total of 53 foreign exchange bureaus have been closed since the start of the year, deputy Governor of the Central Bank of Egypt (CBE) Gamal Negm said on Friday.
The CBE has accelerated a crackdown against black market traders, closing a large number of the countries’ foreign exchange offices, which it blames for growing pressure to devalue the currency.
Egypt is facing a dollar shortage with sources of hard currency inflows like tourism and investment slowing down. Driven by the shortage, rates on the black market exceed 12.65 to the dollar while banks kept the pound steady at 8.88.
Negm said during the Union of Arab Banks Forum currently held in Sharm El-Sheikh that penalties are directed towards companies that were found guilty of manipulating and speculating on the price of the US dollar in the country’s parallel currency market.
The CBE’s governor said that they hold daily inspection campaigns on exchange bureaus to detect violations.
On Aug. 9, parliament set prison sentences of up to 10 years and fines of up to 5 million pounds for traders selling foreign currency at black market rates.
The total number of foreign exchange bureaus licensed to operate in Egypt was 115 at the end of last year, but now there are only 62.
The CBE devalued the pound by about 14 per cent to reach EGP 8.78 against the dollar in March in an effort to close the gap between the official and parallel rates but the move failed to boost dollar liquidity or close the gap.
Years of political turmoil led to a drop by more than a half of Egypt’s foreign reserves ($15.536 billion in July) in the years following the popular uprising in January 2011, which ended the rule of President Hosni Mubarak. The instability that ensued has driven tourists and investors away.