Egyptian banks recently tightened limits on foreign currency withdrawals from local currency accounts as they seek to conserve scarce dollars, clients who plan to travel abroad can now only withdraw $2,000 or less.
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The banks have also lowered the amount of foreign exchange that clients can withdraw when abroad. Egypt’s ongoing shortage of foreign exchange has forced some merchants to start demanding payment in dollars.
As pressure against the Egyptian pound mounts, banks in the country are reportedly imposing limits on the amount of foreign currency travelers can withdraw before departing, or when they are abroad, a report has said. While there has been no formal announcement about the new limits, banks are said to have sent notices advising clients of the changes.
According to a Reuters report, one of these banks, HSBC, has informed its clients that the maximum amount of foreign currency they can withdraw for travel purposes is now $1,500. Before the changes, the bank’s clients could withdraw a maximum of $5,000. The report, which cites two unnamed sources, added that once abroad, clients will only be allowed to withdraw a maximum of $5,000 — down from $10,000.
At Commercial International Bank, clients intending to travel were reportedly told they could only withdraw forex which is equivalent to between $1,000 and $2,000. Another financial institution, First Abu Dhabi Bank, has reportedly lowered the withdrawal limit to the U.S. dollar equivalent of $518, or 10,000 pounds.
Egypt’s biting foreign currency shortages and the depreciating currency have prompted merchants, including real estate companies and car dealers, to start demanding payment in foreign currency. While this practice is said to be illegal, according to Ahmed Shiha, Egyptian companies doing this “are taking advantage of the circumstances and the customers’ needs for specific products.”
Egypt has been struggling with a shortage of dollars exacerbated by the knock-on effects of the war in Ukraine, which has put pressure on the currency and sharply slowed down imports.
From the start of October, HSBC (HSBA.L) reduced the maximum monthly withdrawal for travel purposes to $1,500 from $5,000, and the maximum customers could withdraw abroad to $5,000 from $10,000 a month, two sources at the bank said.
One source at Commercial International Bank (CIB) (COMI.CA) said the lender was allowing customers to withdraw $1,000-$2,000 before they travel, depending on the size of their accounts, down from $10,000 previously.
Because of domestic dollar scarcity, some customers had been depositing money in local currency in order to withdraw it in foreign currency at official rates abroad, said the source.
Neither bank could immediately be reached for official comment on the measures