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by Ahmed Shafiq


CAIRO, Aug. 12 (Xinhua) -- A recent call by Egypt's parliament speaker for drafting a law to permanently close money exchange bureaus to resolve distortions in the exchange rate system might be harmful to the already staggering economy, experts said.


Observers believe that the government's measures against money exchange companies and calls for closing them will further deteriorate the Egyptian economy and increase a U.S. dollar crisis in Egypt.


Egypt is witnessing an unprecedented devaluation of its currency, with the exchange rate of the U.S. dollar once exceeding 13 Egyptian pounds on the black market, the first time in Egypt's modern history.


The CBE has put the official value of the pound steady at 8.78 to the dollar in the official market to bridge the gap between official and black market rates. However, prices at the parallel market kept skyrocketing.


This led Parliament Speaker Ali Abdul Aal to describe exchange companies as a "cancer in the Egyptian economy," urging for shutting them down.


His comments came in a session during which the parliament gave its final approval to amend the law of the Central Bank of Egypt (CBE) in order to increase penalties against companies that sell the U.S. dollar at prices higher than those of the CBE.


"Such policies will not solve the problem," Dr. Abdul Sattar al-Ashra, economic advisor to the Egyptian Commerce Chambers Union told Xinhua. "Monitoring black market dealers is much more complicated than observing an identified number of money exchange companies."


Al-Ashra urged the government to take more punitive measures against companies that violate the law instead of permanently closing them.


"These companies have helped build the Egyptian economy for years and shutting them, especially who committed no violations, will negatively affect the already fragile economy of Egypt," he stressed.


The Arab country, which relies heavily on imports to support its large population, has been suffering from an acute shortage of the U.S. currency in the wake of 2011 uprising which was followed by political and security unrests that have turned away tourists and foreign investors, two major sources of hard currency.


The country's foreign currency reserves over the past five years declined from 36 billion U.S. dollars in early 2011 to 17.5 billion dollars as of the end of May 2016.


In an attempt to fight the dollar price hike on the black market, the CBE has closed 47 of 94 licensed currency exchange bureaus this year for violating regulations and selling the U.S. dollar at the price of the black market.


According to the CBE, a total of 26 companies of the 47 have been closed permanently and have their licenses revoked, while the rest of the bureaus are shut for up to 12 months, according to their violations.


Seemingly, the news of the parliament's willingness to close money exchange companies has angered owners of these firms who accused the government and the parliament of dealing with them as "criminals."


"Shutting down our busine.

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