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Central Bank of Egypt building. Image Courtesy: Central Bank of Egypt
Egypt’s banks have expanded their holdings of foreign assets on the back of strong foreign direct investment (FDI) inflows.
The banking sector in the country saw its net foreign assets (NFA) surge by 47% to $15 billion in March, from $10.2 billion in February, according to figures released by the Central Bank of Egypt (CBE).
This marks a significant turnaround from a year ago when banks in Egypt owed more in foreign currencies than they held, with a net foreign liability (NFL) position of $4.19 billion.
The latest central bank figures indicate that financial institutions have expanded their foreign assets.
“The month-on-month widening in the total NFA position is mainly attributed to a $4.51 billion increase in the banking sector’s foreign assets, while foreign currency liabilities remained unchanged,” said Heba Monir, financial analyst and economist at HC Securities and Investment.
“This reflects a meaningful improvement in foreign exchange liquidity within the banking sector.”
The rise can be attributed to the $2.7 billion FDIs that Egypt recorded in March, as well as the $1.2 billion tranche of the International Monetary Fund’s $8 billion extended fund facility.
“Both developments have played a key role in boosting foreign currency liquidity at local banks,” Monir said.
(Writing by Cleofe Maceda; editing by Seban Scaria)
