There have been a some unusual capital flow developments involving Egypt illustrating that there is a shortage of dollars building which has been caused by the decline in oil prices. This decline in oil has resulted in a decline in subsidies for Egypt from other Arab nations. What has been taking place is interesting. Shares of Commercial International Bank Egypt on the Cairo market have been bought using Egyptian pounds and then dumped in London sold for dollars taking a loss between 20% and 30%. There is such a shortage of dollars building, there are developing net capital movement through proxy instruments.

These trades have been creating regulatory problems. Typically, regulatory limits dictate how much of the company’s shares can be be traded offshore in the form of global depository receipts. This flow of shares is impacting regulations all because of  a shortage of dollars.