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Egypt’s currency strengthened from a record low against the US dollar on the black market after the central bank eased rules on the use of credit cards abroad.
The pound was changing hands at between 43-44 per dollar on the parallel market on Thursday, versus 48 the previous day, a number of traders said.
That rate is still significantly weaker than the official one of 30.9, underscoring Egypt’s dire shortage of foreign currency.
There’d been a rush to hoard foreign exchange after the central bank last week started requiring customers provide proof of travel before departure to use credit cards in other countries, said the people.
The regulator revised that directive on Thursday so users only need to notify their bank’s customer-service department and show evidence within 90 days of returning from the trip - an announcement that eased worries that yet-stiffer restrictions were to come.
A number of traders said they were pausing operations Thursday and waiting until the end of the day to assess the situation, as they struggled to find dollar buyers. The pound traded at about 42 on the parallel market a week ago.
Egypt has devalued the pound three times since early last year, leading it to lose almost half its value. Authorities says it’s shifting to a more flexible exchange rate, but delays in fully implementing that have held up the review of a crucial $3 billion International Monetary Fund rescue program.
Derivatives traders are hedging against the prospect of a further currency devaluation.
The pound’s 12-month contract in the non-deliverable forwards market has weakened almost 9% since mid-September, reaching 45.4 against the dollar on Thursday.
