Egypt’s net international reserves (NIRs) increased slightly by the end of January to reach $40.1 billion, up from $40 billion recorded by the end of December 2020, the Central Bank of Egypt (CBE) announced on Wednesday.
In September 2019, Egypt’s NIRs recorded an all-time high of $45.1 billion, before witnessing an immense fall in March 2020, reaching $40 billion, driven by the unprecedented blow to global financial markets arising from the COVID-19 pandemic.
COVID-19 has caused the sharpest portfolio flow reversal on record for emerging markets, including the Egyptian market, according to the CBE.
As of the end of June 2020, Egypt’s NIRs started to bounce back for the first time since March, increasing to $38.2 billion, up from $36 billion in May.
CBE Governor Tarek Amer said in previous statements that mid-June witnessed a strong return of foreign investors to the Egyptian financial market, in light of the global market recovery and the successful efforts by the Egyptian government to contain the pandemic and its repercussions.
Despite a 39 percent drop in its foreign direct investments (FDI) inflow, Egypt managed to maintain its position as the country with the most FDI inflows in Africa with $5.5 billion in 2020, according to the UN Conference on Trade and Development (UNCTAD).
On Monday, the CBE announced that remittances from Egyptian expats had seen an increase to $27.1 billion from January to November 2020, up from $24.2 billion a year prior, an increase of 11.9 percent.
Meanwhile, treasury bill auctions have managed to attract 10 percent of foreign investments since June, and the Egyptian pound's performance against the US dollar has improved since the beginning of 2020 by 0.66 percent, unlike other currencies in the emerging markets, according to the CBE.
Egypt’s foreign exchange reserves are expected to stand at $44 billion in 12 months’ time and to jump to around $45.2 billion in 2022, according to Trading Economics (TE).