Egypt’s net international reserves rise to $ 40.2 billion in February (CBE)
Egypt’s net international reserves recorded $ 40.2 billion in February, up from $ 40.1 billion in January 2021, the Central Bank of Egypt (CBE) revealed on Sunday.
Egypt’s international reserves consist of foreign currency (FX), gold, Special Drawing Rights (SDRs) and net loans from the International Monetary Fund (IMF).
Foreign exchange reserves rose by about $ 363 million to $ 35.905 billion in February, from $ 35.542 billion reported in January.
However, gold reserves declined in February by $ 144 million to $ 4.140 billion, from $ 4.284 billion in January. The SDR balance also fell by $ 118 million to $ 161 million in February, from $ 279 million the month before.
Banking expert Mohamed Abdel Aal believes that the increase in foreign exchange reserves in February, for the ninth consecutive month, indicates that Egypt has no shortage of foreign currency liquidity.
It also means that all international obligations and rights are paid on time and that Egyptian banks honor all import credits for strategic goods.
Abdel Aal added that, importantly, the high reserves indicate that traditional sources of exchange, except tourism income, are operating within their natural rates.
He noted that this will increase the Egyptian pound exchange rate in the short term to the price level of EGP 15.5 per US dollar.
The objective of the reserve is to support the currency, to fulfill the State’s external obligations and to guarantee its imports of basic products for several months. The size of the reserve for any country represents a source of strength or weakness depending on its value and ability to meet the state’s foreign exchange obligations.
The resources of the Suez Canal Authority, tourism, exports, foreign investment and workers’ remittances abroad are the most important resources that fuel Egypt’s reserves.
It should be noted that despite the decrease in foreign exchange reserves of more than 6 billion dollars in 2020, it was able to resist strongly the repercussions of the pandemic of the new coronavirus (COVID-19).
The firmness of the reserves in the face of the events of 2020 was supported by the success of the CBE in building them before the outbreak of the pandemic, reaching a record high of $ 45.510 billion in February 2020.
The deputy governor of the CBE, Ramy Aboul Naga, had indicated that the constitution of reserves at levels unprecedented before the crisis and the widespread implementation of structural reforms had prepared the Egyptian people to better cope with external shocks.