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In another move to control the flow of foreign currency, Egypt’s central bank has issued new directives to commercial banks.
This time, the banks are instructed to limit the use of credit cards for transactions in foreign currencies, both within the country and internationally.
This action comes just a week after the central bank ordered banks to halt the use of Egyptian pound debit cards for overseas purchases. The central bank’s efforts are aimed at curbing the outflow of foreign currencies from the country.
The central bank justified its decision by citing instances of speculators exploiting these cards, especially by making cash withdrawals from foreign ATMs without any actual travel taking place. As a result, the central bank has instructed banks to set and activate the highest credit limit, Reuters reported.
Within the country, transactions using these cards will now be capped at a maximum of US$250 per month. Egypt’s ongoing foreign currency shortage has grown severe in the past two years. Despite a growing disparity with the black market exchange rate, the country has maintained its fixed exchange rate against the dollar since March. Egypt currently charges both debit and credit card transactions at the official exchange rate of about 31 pounds to the dollar. In contrast, on the black market, the exchange rate is around 40 or 41 pounds to the dollar.
According to a senior banker “What they discovered is that 70 percent of credit card usage is people here in Cairo ordering stuff from abroad,”
“If you’re travelling you get your credit limit, whatever it is, 32,000 Egyptian pounds (US$1 000) or whatever, according to your bank, but you have to inform the bank before you travel,” he said. -Business Insider Africa
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