Egypt has been experiencing a shortage of hard currency, especially the US dollar, as a result of the exit of approximately $25 billion in indirect investments (hot money) since the onset of the war in Ukraine. This has resulted in import backlogs at ports, which has affected the local market and contributed to the rising inflation.
The CBE said that these indicators represent positive improvements for the exchange rate in the country, including the slowdown of the US dollar trading price against the Egyptian pound to post an average of EGP 29.61 at the end of Monday’s transactions, down from close to EGP 32 on Wednesday.
The Egyptian pound drastically depreciated on Wednesday and Thursday, hitting its lowest levels against the US dollar following a presser the International Monetary Fund (IMF) held on Tuesday to reveal the Egyptian authorities' commitments regarding the financial and monetary policies under the new IMF-backed $3 loan deal approved in December.
According to the CBE, trading of the interbank has also grown since Wednesday by over 20-fold.
The CBE added that the banking sector has covered over $2 billion of importers' and bank clients' demands for the US dollar over the past three days.
For the fourth consecutive month, the CBE’s net international reserves (NIRs) rose by $470 million to record $34 billion, up from $33.5 billion by the end of November.
In the past four months, Egypt’s NIRs inched up by over $860 million despite the repayment of about $2.5 billion in external debt liabilities in November and December.
December's NIRs are the highest since May 2022, covering around 5.4 months of Egypt’s imports.
Under the IMF-backed deal, the CBE said it is committed to a flexible exchange rate, alluding to another wave of Egyptian pound floatation.