Egypt’s parliament has approved jail terms for those, who speculated against the Egyptian pound, on Tuesday. The currency black market this year has helped push inflation to the highest level since 2008.
Violators will be sentences of three to 10 years in jail, and fines of as much as 5 million Egyptian pounds ($563,076), the state-run Middle East News Agency reported. Before the changes, punishments were limited to the suspension or revocation of currency trading licenses.
From the beginning of the year, Egypt's central bank has closed 48 foreign exchange bureaus for trading at black market rates and other violations. 26 units have been closed permanently and 22 have been suspended for three months to a year.
Egypt blames black market traders for growing pressure to devalue the currency. The dollar is being sold on the black market for about 12.65 to 12.75 Egyptian pounds, according to traders, far more than the official rate of 8.78.
In a bid to end black market trading and ease a currency shortage that has harmed economic growth, The central bank devalued its currency by nearly 14 percent in March. The move caused inflation to accelerate, the regulator said, with prices growing annually by 14 percent in both July and June, the highest level since December 2008. Foreign reserves fell to a 16-month low in July at $15.5 billion, enough to cover about 3 months of imports.
Egypt is trying to secure $12 billion help from IMF in a three-year lending program. This money hopefully will plug a funding gap, restore market confidence and lure investment to ease the currency crunch.