Currency Crisis Forces Egyptian Banks to Halt Debit Card Use for Foreign Transac
-
Alaina
- . October 6, 2023
- . Update: October 6, 2023 1:25 pm
Amid the escalating currency shortage in Egypt, at least two prominent banks have taken decisive action by suspending Egyptian pound debit cards for transactions outside the nation.
The move comes as a response to the urgent need to preserve dwindling foreign currency reserves. Customers of both Arab African International Bank and Arab International Bank received official notices confirming the suspension, signaling a crucial development in Egypt’s financial landscape.
Economic Crisis Deepens in Egypt:
A spokesperson for the Arab African International Bank confirmed the decision, attributing it to the ongoing foreign exchange shortage gripping Egypt.
The country’s currency has already experienced three devaluations in the past year, and the situation has worsened due to a persistent scarcity of US dollars and mounting inflation.
The Russia-Ukraine conflict, now in its 12th month, has compounded Egypt’s economic woes, with inflation surging by nearly 32 percent year-on-year, primarily driven by soaring food prices.
Impact on Exchange Rates and Shopping Habits:
Debit card transactions have been subject to an official exchange rate of approximately 31 Egyptian pounds to the US dollar, significantly lower than the black-market rate of around 40 to 41 pounds per dollar.
Many debit card holders have exploited this discrepancy by making bulk purchases, often in countries like the United Arab Emirates, for gold and mobile phones. Some even sent their cards abroad for family members to utilize.
This practice has contributed to the drain on foreign currency reserves, prompting banks to suspend debit card usage outside Egypt.
Keep Reading
Impending Industry-wide Measures and Currency Controls:
According to Arab News, the banks are expected to follow suit with similar restrictions on debit card transactions in the coming week.
Concurrently, banks have been imposing tighter limits on the amount of foreign currency clients can purchase within Egypt and on the expenditures charged to credit cards while abroad.
These collective actions aim to address the critical foreign currency shortage and stabilize Egypt’s turbulent economic landscape.
