Egypt’s central bank has issued a warning to banks that operate in the country against charging extra commissions on transactions involving foreign currencies, reported Zawya, which obtained the document containing the directive.
Central Bank of Egypt (CBE) Governor Hisham Ramez is quoted in the document as saying that the process is “part of the central bank’s on-going efforts to regulate the foreign exchange market during this difficult time in Egypt”.
He said the CBE is analyzing the foreign exchange market to ensure compliance and improve its efficiency and curb any violations.
“Egyptian banks used to impose a commission of between 1% and 1.5% on foreign currency sales and CBE gave them the freedom to determine their rates from the 1990s until now,” a unnamed source in the banking industry told Zawya.
The article 135 of the Egyptian banking law permits the board of directors of CBE to impose following measures against banks found to have broken the rules: send a warning, impose limit on amount of credit granted, bar the financial institution from engaging in some transactions, or lower or postpone credit facilities offered to the institution. It is also allowed to compel the bank to place non-interest earning deposit with the CBE.
Since Ramez rose to the helm, he has relaunched a repatriation program that ensures foreign investors who buy Egyptian government bonds and stocks access U.S. dollars in a bid to restore investor faith in the economy.
“Covering the backlog owed to foreign investors on the stock market in two weeks was a good sign for the Egyptian economy, especially since some believed that after covering 50% of the backlog it would take months to cover the other half; but it was done in less than two weeks,” said Ramez. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Yashu Gola at email@example.com