Egypt’s central bank on Wednesday removed limits on international currency transfers, scrapping a $100,000 monthly limit on individual bank transactions in a long-awaited reform intended to lure back badly needed foreign investment.
Egypt put in place strict controls on the movement of foreign currency after its 2011 political uprising in an effort to limit the flight of capital.
As part of a three-year $12 billion International Monetary Fund lending program that began late last year, Egypt is obliged to end these controls, which still include a $50,000 per month deposit cap for importers of non-priority goods.
“This decision comes as the central bank continues to take steps in the framework of economic reform which it began to implement last year, and in order to strengthen confidence in the Egyptian economy,” a central bank statement said.
“The lifting of controls also contributes to attracting more foreign investment inflows and deposits from Egyptians abroad, given their ability to re-transfer them outside the country without any restrictions,” it said.
Deposit cap untouched
The central bank statement did not comment on the status of the $50,000 deposit cap for some importers.
Bankers welcomed the move, which will likely come as a relief to investors who have been restricted from repatriating profits for years.
“We knew since the IMF deal was signed that it would have to happen before June or July ... this will increase confidence in the economy and show that things are moving in the right path,” said one banker.
As part of the IMF-backed reforms, Egypt in November floated its currency, allowing it to roughly halve in value. The move helped crush a black market for dollars that flourished as dollars grew scarce last year and importers were unable to source hard currency from the formal banking system.
The ability to again move foreign currency out of the country could put renewed pressure on Egypt’s pound currency as individuals look to buy up dollars and move them abroad, said
The Egyptian pound on Wednesday traded at about 18 pounds to the dollar.