[HN Gopher] Egyptian banks suspend debit card use in foreign cur... ___________________________________________________________________ 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. ___________________________________________________________________ (page generated 2023-10-09 23:01 UTC)