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Egypt Restricts Foreign Currency Credit Card Use

by Deepak Mirza
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CAIRO, Oct 17 (Reuters) – Egypt’s central bank told commercial banks on Tuesday to restrict customers from using credit cards for transactions in foreign currencies both domestically and abroad, the second time in a week it has cracked down on plastic.

Last week, the central bank told banks to suspend the use of Egyptian pound debit cards for purchases outside the country to stop a foreign currency drain. Now in oral instructions to banks it has extended restrictions to credit cards.

“In light of what has been seen recently of some speculators misusing these cards by making cash withdrawals from abroad without actually travelling, instructions have been issued to banks to open and activate the maximum credit limit,” the central bank said in a press release.

Domestic transactions will now be limited to the equivalent of $250 a month, three bankers said.

Egypt has been facing a worsening foreign currency shortage over the last two years. Since March it has kept its currency fixed against the dollar despite a widening gap with the black market rate.

Both debit and credit 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.

“What they discovered is that 70% of credit card usage is people here in Cairo ordering stuff from abroad,” a senior banker said.

“If you’re travelling you get your credit limit, whatever it is, 32,000 Egyptian pounds ($1,000) or whatever, according to your bank, but you have to inform the bank before you travel.”

Source : Reuters

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