Remarkable decrease of dollar exchange rate against Egyptian pound
Egypt, Economics, 11/2/2000

smael hassan the governor of the central bank of Egypt (CBE) said US dollar exchange rate remarkably declined against the Egyptian pound in exchange companies.

He said banks are meeting needs of their clients from foreign exchange to cover their needs. he added the central bank of Egypt will cover the position of foreign currencies in banks.

At the meeting, sponsored by cairo economic information centre in cooperation with economic editors section on tuesday, the governor of the central bank said dollar exchange rate is currently ranging between 383-384 piasters for buying and 387-388 piasters for selling in the light of the measures taken for regulating foreign exchange markets which have recently been taken by the central bank.

Hassan said Egyptian economy performance in the year 1999/2000 was extremely positive, where current account deficit declined to 1.270 billion dollar against to 2.487 billion dollar in 1997-1998.

He said improvement of the current account was associated with improvement in foreign assets, an improvement in the status of oil sector and strong desire on the part of foreign investors to enter Egyptian markets. He said Egyptian banks are committed to credit policies which have been subjected to world criteria since 1991 in order to protect the dues of depositors.

(CBE) governor said that banks will abide by the prohibition of credit facilities with a foreign currency cover.

Hassan said the already standing credits will be liquified to prevent speculations and regulate the local market. Egyptian banks will stop opening current accounts in Egyptian pounds in banks working abroad, said Hassan.

The decision is taken according to the october 4 meeting between the CBE governor and leading bankers.

Foreign exchange will be available for customers in all banks, said the CBE governor. No investor has been recently denied foreign currency to make remittances abroad after the recent regulations, he said.

The governor underlined that the CBE regulatory measures for the exchange market controlled the day-to-day dealings rapidly and eliminated speculations as the dollar rate declined in the exchanges.

Also, exports rose and imports declined, improving the inflow of foreign currency into the country. The deficit in the current account shrank from $ 2.478 billion in 1997/1998 to $ 1.723 billion in 1998/1999 and $ 1.170 billion in 1999/2000, Hassan said.

Hassan estimated the amount of remittances made by Egyptian workers abroad to Egyptian banks at $ 3.717 billion in 1997/1998 against $ 3.772 bln in 1998/1999. in 1999/2000, the remittances hit $ 3.747 bin.

The free customs levied on vessles crossing the suez canal paid $ 1.1776 billion in 1997/1998, $ 1.771 billion in 1998/1999 and $ 1.780 billion in 1999/2000, he added.

Asked about the credit risks, he said that Egyptian banks were pursuing credit policies obliging banks to cover their debts with special allocations to deal with sub-standard, doubted and bad debts and secure the rights of depositors.

When such allocations are not enough to cover the debts, the CBE stops giving dividends to shareholders. A review of banks' situation is made four times a year, he said.

The debts paid regularly are covered with allocations that reach 1 percent at least of their value, while sub-standard debts 20% , doubted debt s 50% and bad debts 100%, the governor added.

Hassan affirmed that the allocations of non-regularly-paid debts are satisfactory at present and enough.

Asked on rescheduling debts of some stumbling customers, the CBE governor Wednesday said there are no concessions given to any customer and no sum were slashed.

He described press reports that some debtors fled abroad without paying their debts as exaggerated, adding that the banks would not cede the money, and would take all necessary steps to get their money back.

On fears that Egypt might suffer an economic crisis as was the case with Asian and Latin American countries, Hassan said Egyptian economic features are strong as the foreign debt is a modest.

The foreign debt is put at $ 26.758 billion and the short-term installments to be paid during the coming 12 months range between 7% and 81.

The governor said Egypt does not have to borrow money from abroad for a simple reason, it has a safe monetary reserve.

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