The Central Bank of Egypt (CBE) announced new regulations to credit card transactions in foreign currency, restricting use inside Egypt to facilitate using the full capacity of the card abroad, according to a statement issued on 17 October.
The CBE cited “abuse” by people undertaking foreign currency withdrawals “without actually being abroad” as the reason for the move.
Accordingly, domestic foreign currency spending limits will be decided by each bank, and the full credit limit of the card can only be used in foreign currency by informing the bank’s call center of travel abroad.
Three local bankers told Reuters that domestic spending in foreign currency will be limited to USD 250 (EGP 7725) per month.
This move comes shortly after Egypt suspended debit card use in foreign currency and restricted cash withdrawals earlier this month.
Egypt has been going through a dire foreign currency shortage. This has led to the return of the parallel market, where the Egyptian pound rate is about 20 to 25 percent lower than its official counterpart at approximately EGP 31 to the US dollar officially and between around EGP 39 and EGP 41 to the US dollar in the black market.
Withdrawing foreign currency using a credit or debit card through the official rate can therefore be profitable if sold in the black market.