Cairo (Reuters) – At least two Egyptian banks have suspended the use of Egyptian pound debit cards outside the country to stop a drain on foreign currency as the country’s currency shortage worsens.
Arab African International Bank sent a notice to customers on Wednesday and Arab International Bank sent one on Thursday announcing the suspension, according to several customers.
A customer representative for Arab African International Bank confirmed the move, saying it was due to the country’s foreign exchange shortage.
One banker in Egypt said all banks were facing similar problems as a result of the currency shortage, but that each was taking decisions separately.
A substantial number of debit card holders had been using cards to make bulk purchases, often in the United Arab Emirates, of gold, mobile telephones and other products to take advantage of the Egyptian pound’s low official exchange rate.
Debit card transactions are charged at the official rate of about 31 pounds to the dollar whereas on the black market a dollar sells for around 40 or 41 pounds. Egypt has kept its currency fixed against the dollar since March despite a widening gap with the black market rate.
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“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,” the banker said.
Other banks were likely to introduce similar restrictions next week, the banker added.
Banks in recent months have also been tightening up on the amount of foreign currency clients can buy in Egypt and on how much can they can charge to their credit cards while abroad.
