The Central Bank of Egypt (CBE) has eased its restrictions on credit card use abroad that triggered a flight to the greenback and caused the EGP to weaken significantly in the parallel market.

What’s changing: Credit card users will no longerneed to submit proof of travel prior to leaving the country but will need to notify their banks of their intention to travel. The new rules instead require users to provide proof that the card was used while abroad — by sending their bank arrival and departure stamps on their passports — within a 90-day period. Failing to do this will get you a black mark on your credit rating.

Remember: Earlier this month, the CBE began limiting the amount of FX credit card users could spend per month to the equivalent of USD 250. Under the rules, account holders are able to access their normal maximum limit only if they are outside of Egypt and provide proof of travel before leaving the country.

Cue a rush to the greenback: When first announced, the restrictions sent the EGP plunging against the greenback in the parallel market as people rushed to acquire FX. The USD / EGP exchange rate weakened to 48 from 42 in less than a week, Bloomberg reported Thursday, citing data from what it said was a number of traders.

The USD weakened against the EGP on Thursday following the announcement, according to traders, who said that the currency was changing hands to 43-44 / USD compared to 48 on Wednesday.

Remember: The credit card restrictions came a few days after most banks began blocking the use ofEGP debit cards abroad as the central bank moved to stem outflows of FX.

What they said: “Egypt is in a catch-22 situation. USD shortages are prompting policymakers to restrict access to foreign currency … But these restrictions could prompt people to hoard USD, increasing their scarcity, and weakening the EGP in the black market,” Bloomberg’s chief EM economist Ziad Daoud said.

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