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Egypt offers dollar deposits to ease currency crunch

Total Gulf deposits with Egypt's central bank stood at $29.9 billion as of March 2023
The banks are banned from accessing the Iraqi central bank's daily dollar auction, a main source of hard currency in the country

Egypt’s two biggest state banks on Tuesday issued US dollar-denominated certificates of deposit with high returns, in what appears to be the country’s latest attempt to lure dollars away from the black market and back into the financial system.

The North African nation is grappling with a shortage of hard currency, with the Egyptian pound having lost nearly 50 percent of its value against the dollar in a series of steep devaluations since March 2022.

Banque Misr and the National Bank of Egypt are offering a three-year dollar-denominated deposit certificate with nine percent annual interest to be paid upfront in Egyptian pounds.

The banks said they were offering another three-year dollar deposit certificate with a seven percent yield paid quarterly in US dollars.

Both certificates are offered to Egyptians and foreigners alike with a minimum deposit of $1,000.

Egypt has been struggling with rising debts and record inflation since Russia’s invasion of Ukraine exposed its economic vulnerabilities, prompting it to seek assistance from the International Monetary Fund (IMF) under a $3 billion loan programme.

The country pledged to move to a flexible exchange rate regime and reduce the state’s footprint in the economy while boosting the private sector.

However, the first review under the IMF programme has been postponed as the exchange rate has remained steady at around 30.85 pounds to the dollar since March.

Egyptian President Abdel Fattah al-Sisi appeared to rule out a further currency devaluation anytime soon in remarks made to a youth conference in June, saying such a move could harm national security and hurt Egyptian citizens.