Ending Egypt's currency black market brings new challenges

Egypt's currency black market, a thorn in the side of successive governments, has virtually disappeared in the past two months following a central bank crackdown.

Yet, while the authorities hope this will signal to foreign investors that the economy has returned to normal after four years of turmoil, Egyptian businesses are suffering.

Importers and exporters in particular say official measures to cap dollar deposits at Egyptian banks have reduced foreign exchange liquidity and stifled business activity -- without achieving long-term stability in the currency market.

The black market had flourished as a slump in tourism and investment since the overthrow of Hosni Mubarak in 2011 limited supply of hard currency -- undermining an image of relative price stability that authorities have sought to portray for decades.

After promising for months to eliminate the black market, the central bank in February placed limits on dollar-denominated bank deposits of $10,000 a day and $50,000 a month, soon after weakening the pound by 5 percent over a few weeks.