Several local banks in Egypt have suspended hard currency cash withdrawals and purchases made outside the country using debit cards.
This is in response to instructions from the Central Bank of Egypt (CBE), which aims to reduce pressure on foreign currency reserves. The National Bank of Egypt (NBE), Banque Misr (BM), Commercial International Bank (CIB), and Emirates National Bank of Dubai (ENBD) have all sent text messages to their clients informing them of the new measures.
The Arab African International Bank (AAIB) also suspended the use of debit cards outside Egypt and set new limits on withdrawals and purchases by credit cards abroad.
An official source at one of the national banks explained that the CBE has directed all banks operating in the local market to suspend hard currency withdrawals made abroad using debit cards. However, no official circular or statement has been issued by the CBE.
The reason behind the action is to prevent the misuse of debit cards abroad, where some holders tend to withdraw cash in hard currencies, particularly US dollars, and then sell it in the parallel market to benefit from the significant difference between the official rate and that on the black market.
As per the official exchange rate of the CBE, the US dollar is valued at 30.95 Egyptian pounds, while it is traded at over 40 Egyptian pounds in the black market.
HSBC Egypt has also announced that starting from 1st October, the bank has lowered the limit on monthly cash withdrawals made abroad from $1,500 to $1,000, or their equivalent in other currencies.
Egypt has initiated a plan to secure $191 billion through 2026 to address the US dollar shortage in the local market. Some international institutions, including HSBC and Fitch Solutions, have predicted in reports issued this week that the EGP could lose up to 25 percent of its value against the US dollar before the end of 2023.
