CAIRO -- In today’s moribund Egyptian economy, a man who calls himself Youssef has become a crucial component to keeping the wheels of commerce turning.
His business is furtive, his source of funding unknown and he’s so secretive about what he does that taking his photograph or publishing his full name is forbidden. He carries wads of cash.
Youssef is a black-market money dealer, selling dollars for Egyptian pounds at a markup. With the Egyptian government desperate to keep dollars in the country, banks are limited in how many they may let their clients have. People who need dollars are willing to pay Youssef more to get them.
He’s become one of the few sources of unlimited capital in Egypt’s flailing economy.
Youssef’s phone rings constantly as he sits in another man’s carpet store in one of Cairo’s busiest markets. He’s well-known in the market, but he won’t sell to just anyone; one must be introduced as trustworthy. No one knows where he gets the dollars; everyone knows not to ask.
Youssef tells the caller he’s selling “the green,” referring to the dollar, for 7.37 Egyptian pounds, compared with the 6.8 rate at the banks. A deal is made and Youssef runs off through the labyrinthine streets to close the deal. With no office, no one knows where he goes to retrieve his stack of dollars.
“If you want $10 million every day, I will get them for you while you’re seated,” he told McClatchy afterward.
Two years of political turmoil has scared off investors and tourists, who had been the main source of foreign currency in this country. That, coupled with an economy floundering in the face of constant political uncertainty, has seen Egypt’s foreign currency reserves dwindle to $13.4 billion, compared with $36 billion just before the 2011 ouster of President Hosni Mubarak. That’s enough to cover only three months of the country’s imports, Ashraf El Arabi, the minister of planning and international cooperation, said in a speech last month at Cairo’s International Book Fair. Many economists fear even that grim assessment is too rosy.
The emergence of a currency black market is the latest manifestation of Egypt’s lawlessness and uncertainty, with a government that seems less capable every day of providing the most basic services.
“Before, whoever got caught dealing would have to forfeit the money and go home,” Youssef said. “But now there is no control over the market at all.”
Where dealers such as Youssef get their dollars is the subject of much speculation. Some think they come from foreign workers in nearby places, such as Libya, or from former powerful figures in the Mubarak government who are looking to make profits off their large savings. With only 10 percent of Egyptians’ money in banks, the economy is largely informal anyway, and cash transactions are common.
While the black market pumps hard currency into the economy, it does so at a cost. For every illegal dollar in the market, the value of the Egyptian pound falls, increasing already-rampant inflation.
In February alone, prices rose 2.8 percent; in the last year, the inflation rate was 8.7 percent, according to a report published by Egypt’s Central Agency for Public Mobilization and Statistics. Food prices are climbing and the cost of imported goods is surging. That’s unlikely to slow if the government can’t stop the hemorrhaging of its foreign currency reserves, the agency’s report concludes.