According to a Reuters report, at least two Egyptian banks have taken measures to halt the usage of Egyptian pound debit cards abroad in an effort to mitigate the drain on foreign currency, as the country’s currency shortage worsens. The Arab African International Bank issued a notice to its customers on Wednesday, and the Arab International Bank followed suit with a notice on Thursday, both announcing the suspension, as reported by several customers.
A representative from the Arab African International Bank has confirmed this action, attributing it to the ongoing foreign exchange shortage in the country. A banking source in Egypt has indicated that all banks are grappling with similar challenges due to the currency scarcity but are making individual decisions in response.
A significant number of debit cardholders have been utilizing their cards for large-scale purchases, often in the United Arab Emirates, buying items such as gold, mobile phones, and other products to leverage the Egyptian pound’s lower official exchange rate. Debit card transactions are conducted at the official rate, approximately 31 pounds to the dollar, while on the black market, a dollar trades for around 40 to 41 pounds. Despite the widening gap with the black market rate, Egypt has maintained its currency’s fixed exchange rate against the dollar since March.
The banker explained, “Sometimes they just send the cards (without leaving Egypt), and they buy things with them. You find there are four or five people from the same family.” Furthermore, it is anticipated that other banks will implement similar restrictions in the coming week.
In recent months, banks have also been imposing tighter controls on the amount of foreign currency that clients can purchase in Egypt and on the expenditures they can charge to their credit cards while traveling abroad.
