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Egypt’s foreign reserves rise 2.17% by the end of 2021

Egypt's foreign reserves

Egypt’s foreign reserves increased by 2.17% during 2021, compared to the previous year.

The Central Bank of Egypt said that Egypt’s foreign reserves increased by $872 million during 2021.

The net foreign exchange reserves rose to $40.935 billion last month, compared to $40.063 billion in December 2020, the centrl bank said.

Egypt’s foreign reserves

On a monthly basis, Egypt’s foreign reserves rose by $26 million in December, compared to $40.909 billion in November.

Meanwhile, Egypt’s foreign reserves consist of major currencies, namely the US dollar, the European euro, the Japanese yen, the British pound and the Chinese yuan.

Egypt’s holdings of the main foreign currencies depend on the exchange rates of those currencies, their stability in international markets, in addition to what the bank adds or withdraws from the reserves monthly.

After the reserves were negatively affected during the floatation of the Egyptian pound in November 2016, below $30 billion, they returned to growth again with the issuance of bonds and bills and the rise in foreign exchange and borrowing revenues.

Foreign investments

In a related context, foreign investments in Egyptian treasury bills fell last October, to their lowest level in seven months.

According to data from the central bank, the decline in foreign investments to the lowest level since April comes amid a partial decline in foreign investments in debt instruments issued in emerging markets.

Foreign investments in Egyptian local currency bills declined by 8% on a monthly basis last October, reaching 347.6 billion pounds.

Foreign investment has been a major component of Egypt, since the currency devaluation in 2016, and foreign holdings of bonds and treasury bills amounted to about $33 billion in August, according to the latest available data.

Last September, Egypt sold $3 billion in bonds in its second foreign-currency-denominated debt securities issuance this year, taking advantage of lower borrowing costs.

Allen Sandeep, head of research at Egyptian Naeem, said, “The numbers are in line with expectations… emerging markets are all witnessing exits from foreign investments in debt instruments.”

The Egyptian government issued local treasury bills worth 168 billion pounds in October, and they were covered 2.6 times, while it issued 145 billion pounds in September and were covered 2.7 times, and the treasury bills issued in August were covered 3.5 times.

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