Egypt's foreign exchange fundamentals gradually spring back, net foreign assets remain positive for the second consecutive month

Release time:

2024-08-09 21:53

Source Event Financial Union

Editor Li Lin

Internship Editor, Wang Yifei

Egypt's net foreign assets (NAF) remained positive in June, the second consecutive month of positive values, according to the Central Bank of Egypt, after maintaining deep negative data for more than two years.

Egypt's net foreign assets fell to 626.6 billion Egyptian pounds in June from 676.4 billion at the end of May. Estimated based on the exchange rate at the end of the month. This equates to $13.05 billion at the end of June and $14.31 billion at the end of May.

In July this year, the Central Bank of Egypt announced that Egypt's net international reserves (NIR) reached a record high of $46.38 billion by June 2024, an increase of $13.26 billion since August 2022. According to Egypt's official interpretation, net international reserves are roughly equivalent to foreign assets and foreign exchange reserves.

Note: NIR past data diagram, source: Central Bank of Egypt.

Since September 2021, Egypt has been using its foreign assets, including the foreign exchange assets of the central bank and commercial banks, to help support its currency. Net foreign assets have been unable to turn positive for two consecutive years after turning negative in February 2022.

But the government's financial position improved in February by selling development rights to the new Mediterranean city of Rashekma for $35 billion and signing a $8 billion IMF financial support package in March.

In addition, Egypt has sharply devalued its currency, triggering a massive inflow of portfolio investment and remittances from migrant workers. According to a senior official of the Egyptian central bank, the flow of foreign exchange into the local financial market has increased by about 200 per cent, of which remittances from Egyptian expatriates have increased by more than 100 per cent compared with the level before the unified exchange rate.

By item, in June, the foreign assets of Egyptian commercial banks declined, but the foreign exchange assets of the central bank rose; at the same time, the external debt of both commercial banks and the central bank rose.

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