Egyptian banks made a collective pledge Wednesday not to hoard hard currencies and sell the quantities available to rein in the slide in the exchange rate of the local pound.
The pledge was published in newspapers after a meeting held Tuesday night at the Egyptian Bank Association, attended by the majority of the country's bank chairmen.
They published a "code of honour concerning foreign exchange" in which they committed "to sell available hard currencies to their customers and to each others".
The move came as the pound lost around 18 percent to the dollar since it was free-floated on January 29.
The foreign currencies' buy rates displayed Wednesday on the central bank website were 5.48 pounds to the dollar, 5.92 to the euro, 8.83 to the pound sterling, 4.02 to the Swiss franc and 4.55 to 100 yen.
Before its flotation, the local currency was only allowed to fluctuate within a band of 3.0 percent around an official median rate of 4.51 to the dollar.
Bankers are complaining of a shortage of hard currency preventing them from fully satisfying demand and consequently allowing the black market to survive the decision to float the pound.
The greenback traded this week on the black market for 5.75 pounds.
Central bank governor Mahmoud Abul-Eyoun charged in Tuesday's state-run al-Ahram daily that "some are hoarding hard currencies and not selling them for speculation purposes."
The central bank ordered Monday a Cairo foreign exchange bureau to close for two months as a penalty for not selling dollars although it had quantities available.
Banks are opening in priority letters of credit for imports with the hard currencies available to them, according to a central bank source quoted by the official MENA news agency.
Letters of credit worth 97 million dollars were opened since January 29, to finance imports needed by the industry (40 million), trade (25 million), services (15 million), agriculture (eight million) and other sectors (nine million), it said.
Banks are rarely selling hard currencies to private individuals, and when they do, they give priority to those who have travel tickets.
Prime Minister Atef Ebeid's government approved Tuesday a new banking bill that spells out formally the forex market rules, confirming the role of the nearly 60 banks operating in the country in setting the exchange rates.
The bill, which will be sent to parliament, also sets rules to prevent money laundering and to ensure the transparency and efficiency of the banking system plagued by bad debts worth several billion dollars.
It provides for setting up a central credit registry to help banks make decisions in granting loans to customers.
Official figures put total non-performing loans at around 46 billion Egyptian pounds, or 8.3 billion dollars at the current exchange rate. They account for 13 percent of total bank deposits of around 346 billion pounds.
Non-performing loans have been a chronic feature of the banking system, mainly of state-owned banks, but nearly a quarter of the bad debt, equivalent to 2 billion dollars, was incurred last year by big names of the Egyptian economy whose ability to pay back was crippled by the September 11, 2001 attacks in the United States as they slowed Egypt's tourism-dependent economy.
Blair blasts Britons over Iraq war