Banque Misr, Egypt’s National Bank provide $800mn to cover imports

Egypt’s top two state banks have provided clients with over $800 million during the past three working days to release goods held up at ports due to a dollar crisis that is hindering imports, Banque Misr’s chairman told Al-Arabiya TV Tuesday.

“Over Thursday, Sunday and Monday (Banque Misr) and NBE have covered all the letters of credit and collection documents at the two banks, with a value over $800 million,” Mohamed Eletreby said, adding that they would continue to meet the ongoing demand.

Egypt has been facing a foreign currency crisis and its central bank has been rationing dollars through auctions with commercial banks, giving priority to imports of strategic items. It sells around $38 million three times a week.

With more demand for hard currency than supply, many goods have been piling up at ports as importers wait for their banks to supply them with the dollars they need to open the letters of credit.

“We have released all the goods that were awaiting release and that is from the banks’ own resources, and we will continue doing so until there is no more demand,” Eletreby added.

Two bankers said a possible scenario for the lenders’ sudden dollar supply to clients is that the banks could have “gone short” by selling the dollars in the expectation that their position will be covered in the short term.

“They could have been promised by the central bank that they will receive dollars soon in an auction or through some other way,” one banker said.

Banque Misr plans to complete procedures to obtain a 3-year $250 million loan in December, using it to strengthen its dollar resources, Eletreby told Reuters on Monday.

On Tuesday, Eletreby said that loan could be increased to $300 million.

Egypt’s central bank imposed tight currency controls in February in an attempt to fight a black market for dollars, increasing the pressure on importers who are no longer able to use the black market to source their dollar needs.

Source: Reuters