Five export councils have submitted a memorandum to Prime Minister Ibrahim Mehleb on Sunday seeking a review of the Central Bank of Egypt’s (CBE) policies, according to head of the Export Council for Building Materials (ECBM) Walid Gamal El-Deen.
Gamal El-Deen told Daily News Egypt that the memorandum requested that Mehleb set the currency price in accordance with supply and demand, not by administrative decisions taken by the CBE.
A series of moves were undertaken by the CBE to limit and eliminate the dollar black market, by devaluating the Egyptian pound earlier this year from EGP 7.14 to EGP 7.62 to the dollar, and to narrow the distance between the official exchange rate and that found in parallel markets.
Gamal El-Deen said that the CBE’s policies wiped out the whole market rather than just eliminated the black market. These decisions were undertaken orally, not transparently, and must be published and clarified.
Gamal El-Deen noted that the CBE applied the policies without creating an alternative for the long waiting period to attain hard currency for business.
He added that those decisions will not help to attract foreign investment because of lack of freedom of transactions in the market in addition to, the lack of dollar liquidity.
Gamal El-Deen attributed the rise of the black market to the lack of investment, tourism revenues and exports, which will not stop by limiting dollar liquidity.
Exporters have problems related to the purchase of raw materials that contribute to the export process; they are unable to buy raw materials to export their products at a cheap price in order to stimulate importers.
“The pound devaluation policy is only a quarrel between the CBE and some traders on the black market, but could have been settled in some other way, not by destroying the economy,” said Gamal El-Deen. “It is not required that the world responds to the CBE’s decision. The CBE governor is not accepting our requests to meet him.”
The CBE imposed daily and monthly limits on dollar deposits in banks ($10,000 and $50,000 respectively) in an attempt to stifle the black market of foreign exchange.
The CBE alleged that the devaluation will also help in slowing the drain on foreign exchange reserves, which shrank by about 10% in a year to $15.4bn.
The CBE surprised the market on 2 July with a sudden increase in the dollar price against the Egyptian pound by 10 piasters. This decision was swiftly followed by another increase of the same value on 5 July.