[HN Gopher] Egyptian banks suspend debit card use in foreign cur...
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       Egyptian banks suspend debit card use in foreign currency
        
       Author : elashri
       Score  : 22 points
       Date   : 2023-10-09 22:09 UTC (51 minutes ago)
        
 (HTM) web link (www.reuters.com)
 (TXT) w3m dump (www.reuters.com)
        
       | Scoundreller wrote:
       | > 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.
       | 
       | Doesn't sound so fixed
        
         | from wrote:
         | It is if you have friends in the central bank. In Venezuela the
         | official rate was like 10x the black market rate at one point
         | so if you had the connections you could go say 60000 bolivars
         | -> (official rate) 10000 USD -> (black market rate) 600000
         | bolivars -> (official rate) 100000 USD.
         | 
         | The massive profitability of this scam resulted in a number of
         | Miami condo sales.
         | 
         | Reading the article:
         | 
         | > 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.
         | 
         | Looks like a similar arbitrage was going on here. I predict
         | they will introduce more capital controls to stop bleeding
         | forex reserves, which won't work and then they will eventually
         | be forced to float the currency, resulting in massive inflation
         | that will stabilize in a year or two. Or they'll just continue
         | on like Argentina and let their economy languish because they
         | refuse to recognize economic reality.
        
       | webninja wrote:
       | > 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.
       | 
       | As a foreigner, it may make sense to short the Egyptian pound
       | versus a stronger currency like the USD and potentially get rich
       | in the same way George Soros did.
       | 
       | Usually when there's a currency arbitrage opportunity, locals
       | will circularly exploit the currency arbitrage (potentially by
       | exchanging pounds with an Egyptian bank for 10% more USD or
       | perhaps another way) until the government spends more of it's
       | foreign reserves than it feels comfortable spending and simply
       | can't hold down the peg any longer.
        
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       (page generated 2023-10-09 23:01 UTC)