The Central Bank of Egypt (CBE) raised on Monday the cap on foreign currency deposits at banks to USD1 million a month for exporting companies, easing restrictions that have led to manufacturing components pile up at ports. According to an as-yet unpublished Central Bank statement, the new rules require firms to earn within three months foreign revenues through their exports equivalent to the sum they deposit to finance imports of components. The statement was sent to Reuters by a market source and confirmed by a Central Bank official. Meanwhile, the USD-EGP hit a new all-time low of EGP9.0 in parallel market trading yesterday as traders reported a rush of clients – both retail and corporates – to buy the greenback. Three exchange bureaus in downtown Cairo told Reuters on Monday they did not have any dollars available. "There is a huge rush over dollars amidst weak supply on the part of exchange bureaus. People want to keep their dollars as the crisis worsens," said one trader.   Our comment: Increasing caps on dollar for exporters comes in line with previous CBE actions, where it is increasingly trying to channel the country’s limited foreign exchange resources towards basic goods and productive sectors in the economy. This comes after CBE and the government had introduced a number of measures to rationalise imports, especially those of finished consumer goods; hence, ensuring additional liquidity is largely available for productive economic activities. We reiterate our view that relaxation of the deposit limits with various forms point to the fact that the EGP has been set on a path of devaluation, which we see materialising towards mid-2016. The decision could possibly have been a driver to the sharp weakening of the EGP in parallel market trading yesterday, where it jumped EGP0.15 in one go. The weakening clearly reflects speculative flows and does not necessarily reflect a sudden increase in regular demand, in our view. The reaction of the CBE to such sharp weakening remains to be seen. (Bloomberg, Reuters and Mohamed Abu Basha)