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I’m in Alexandria. Google shows the exchange rate of EUR to EGP at 1 to 33. I get the same rate when I use my credit card. But when I exchange euros at different places in the streets, in the shops I get much more favourable trades (1 to 40, even 1 to 49).

I read that EGP isn’t pegged to USD anymore, which would trigger independent black market prices. So what’s the deal then?

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  • Is this at chain forex places, or just money changers on the street?
    – Midavalo
    Nov 30, 2023 at 23:06
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    I was buying a suit in a random street shop. The guy exchanged euros for 1-to-40 in a neighboring shop. My friend exchanged for 1-49 in a jewelry shop.
    – gdrt
    Dec 1, 2023 at 0:19
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    That's fairly normal in countries with "weak" currency. In Argentina you can get the "blue rate" on the streets which is about twice as good as the official rate. Even hotels give you a 25% discount for paying with a credit card (at the official rate) instead of cash. In Argentina it's perfectly legal, I don't know about Egypt.
    – Hilmar
    Dec 1, 2023 at 1:36
  • "The guy exchanged euros for 1-to-40 in a neighboring shop": was it a currency exchange or some other sort of shop exchanging the euros as a convenience?
    – phoog
    Dec 1, 2023 at 9:56
  • @phoog It wasn’t a currency exchange shop, was just a street money dealer probably
    – gdrt
    Dec 3, 2023 at 22:59

2 Answers 2

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Without getting into Egypt's current economic crisis, suffice it to say the country has a number of capital controls that aim to limit outflows of Egyptian currency. In October, the government instructed local banks to restrict the use of Egyptian Pound debit and credit cards outside the country and imposed limits on the amount of foreign currency Egyptian bank accountholders can withdraw. Foreign currency for imports is apparently subject to prioritization for "essential" goods.

As a result, the "official" exchange rate doesn't represent the true price people are willing to pay for Euros. If people could get all the Euros they wanted from their local bank at something like 1 to 33 (and if their local bank could get all the Euros it wanted from the central bank), they'd gladly do so, but they can't because of the capital controls. So people who still want more foreign currency are willing/forced to pay a higher price for it because the supply is limited. You, since the Euros in your wallet you flew in with aren't subject to the same restrictions, are offering some of that supply and so benefit from the higher price.

I can't speak to the legality of these parallel market exchange transactions in Egypt.

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You have been introduced to the concept of the 'Floating Exchange Rate.'

This system operates when a country (Egypt in your case) allows its exchange rate to fluctuate without a fixed value.

For more detailed technicalities behind this concept, a Google search can provide comprehensive information.

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    Sadly, this doesn't answer my question. Obviously, egp has floating exchange rates (a simple google search shows this with a graph). This situation where people exchange with 50% difference is not normal. My speculation is that maybe government doesn't peg the currency but sets limits on the amount of foreign currency that Egyptians can buy, which makes black market foreign money prices go up. But I couldn't verify this after googling.
    – gdrt
    Dec 1, 2023 at 0:23
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    This answer seems uncharacteristic of a user with 96.4k reputation, for two reasons. (1) It seems to have nothing to do with the actual question - it doesn't come anywhere close to accounting for the actual difference between 33EGP and 49EGP per Euro. (2) It does little more than directing the OP to google. It seems reasonable to assume that OP is already aware of the existence of google. Dec 1, 2023 at 18:03

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