El-Okdah’s FX Auction Reason Behind Dollar Shortage: Ali Fayez

Ali Fayez, former general manager of Federation of Egyptian Banks (FEB), stated that the FX auction mechanism, introduced by the former governor of the Central Bank of Egypt (CBE) Farouk El-Okdah to address the dollar shortage, has led to increasing the value of dollar when banks’ demand for dollar at these auctions highly increases. He added that the commissions imposed on forex firms and interbank market for selling dollars is also a reason behind the dollar shortage.

During an interview On CBC Channel, Fayez affirmed that there was no need to implement such mechanism by the former governor who resigned a few days after approving the new system as the newly-appointed governor Hisham Ramez has a great banking experience that will enable him to manage the monetary policy professionally and overcome this problem.

He noted that the current value of dollar against the Egyptian pound is more than its actual value as such increase was a result of implementing the FX auction system which neither reduced dollar speculation nor combated the black market of dollar.

The forex market requires US$ 11 million daily in order to be stable and stop speculation, but CBE offers less than US$ 75 million at each auction, he explained.

The current level of Egypt’s foreign reserves is not very critical as Egypt overcame previous crises when it held at times no foreign reserves at all, he added.

Asked about the US$ 4.8 billion loan that Egypt seeks to receive from the International Monetary Fund (IMF), he affirmed that IMF does not impose conditions on crisis-hit economies, but rather asks for the implementation of an economic reform plan to guarantee the repayment of the funds borrowed.