Egypt Central Bank Eases Restrictions on Dollar Deposits

he Central Bank of Egypt eased restrictions on dollar cash deposits blamed for exacerbating a foreign-currency shortage that has threatened the country’s economic recovery.

The bank raised the monthly limit to $250,000 from $50,000 for importers of food, machinery, spare parts, capital goods and medicine, according to a statement posted on its website on Tuesday. Policy makers removed a daily ceiling for the same group of importers as long as they don’t exceed the monthly cap.

Under Governor Tarek Amer, who took charge of the central bank in November amid a national debate on currency policy, authorities have taken steps to bolster confidence in the Egyptian pound and counter speculation of an imminent devaluation. The bank repaid foreign portfolio investors and introduced tighter regulations on imports.

“It is a positive step,” said Ziad Waleed, an economist at Cairo-based investment bank Beltone Financial. “Given that the majority of Egypt’s imports fall under the CBE classification of basic goods, today’s decision will definitely be positive for economic activity.”

The dollar deposit restrictions were introduced by Amer’s predecessor to crack down on black market trading and preserve foreign reserves. At more than $16 billion, foreign reserves are down by more than 50 percent from their 2010 levels, though they have stabilized in the last four months.