A state of ambivalence prevailed over banks regarding the regulations set by the Central Bank of Egypt (CBE) Thursday for banks operating in the local market to obtain dollars through the periodic CBE auctions on Sundays, Tuesdays, and Thursdays.
According to these regulations, banks’ acquisition of dollars during auctions depends on their efficiency in providing foreign exchange to the market, through the evaluation of three factors. The first relates to credit facilitations in foreign currency provided to clients to meet their foreign exchange requirements.
The second factor is the number of clients whose foreign exchange is covered by the bank, especially small clients. The third factor is related to the extent of the banks’ flexibility in meeting their clients’ foreign exchange requirements by opening currency centres within the authorised limits.
The CBE regulations underlined the need for banks to arrange credit facilitations in foreign exchange with correspondents abroad, to finance letters of credit, and work to increasing their foreign exchange resources.
According to the CBE’s letter, each bank should work to arrange credit facilitations in foreign exchange with correspondents abroad to finance letters of credit, and work to increase their resources of foreign exchange.
Exchange market officials in several public, private and foreign banks who spoke to the Daily News Egypt said the purpose of these regulations is to ensure that each bank is committed to providing foreign exchange to its clients. This is to help the CBE resolve the foreign exchange crisis, in order to obtain their dollar requirements during the auctions.
The sources added that the regulations may act as a warning to uncommitted banks that were uncooperative in helping the CBE provide foreign exchange, to counteract their reliance on dollars they get solely from the CBE auctions.
Meanwhile, banks have called on the CBE to explain the regulations in detail so that they can apply them, describing them as vague in their current form.