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Hamas currency arbitrage bears fruit
Convoluted but effective methods: Hamas relieves financial straits due to pressure on Iran by speculating in currency on black market
The Kuwaiti paper Aljarida reported Tuesday that Hamas is in financial straits due to increasing pressure on its main backer, Iran. This is also the reason given by Gaza residents for the Hamas police break-in at the Palestine Bank branch, during which $800,000 were stolen.
The siege and the crisis aren't making things easy for Hamas leaders to obtain funds, according to sources in the organization's rival group, Fatah. The sources say that each day Hamas pockets dozens, perhaps hundreds of thousands of shekels – the result of currency trading made possible by exchange rate differences between black market rates and Gaza bank rates, and between Gaza rates and Egyptian rates.
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According to the Fatah website Palestine Voice, the methods Hamas has developed for the transactions are convoluted but effective. These methods explain Hamas' thirst for shekels and its leaders' demands that Israel allow the inflow of shekels to the Gaza Strip.
It works like this: The dollar exchange rate in the Gazan black market is NIS 3.82 while in the Gaza banking system it is NIS 3.65. Hamas men posing as traders change the shekels in the banking system and thus for each $100 they receive, they save NIS 17 which they would otherwise have had to pay to money changers.
The dollars received from the banks in the Gaza Strip are smuggled through the tunnels into Egypt, where they are exchanged on the black market for Egyptian pounds.
The black market dollar rate is between 5.5 and 6 Egyptian pounds, so for each $100 Hamas traders get some 600 Egyptian pounds. In Gaza, the exchange rate for Egyptian pounds reaches NIS 7.
Thus, if Hamas changes NIS 36,500 in the Gaza banking system it will receive $10,000 which it can change in Egypt for 60,000 Egyptian pounds. This sum is worth NIS 42,000 in the Gaza Strip, enabling Hamas to make a profit of 6,000 in speculative trading.
Doron Peskin is head of research at Info-Prod Research (Middle East) Ltd .
