Egypt’s Foreign Reserves Rise for First Time since February

Foreign exchange reserves rose slightly in June to $38.2 billion from $36 billion in May after three consecutive months of decline, according to central bank data of Egypt (CBE).

Since the start of the COVID-19 crises in March, reserves have dropped by about $10 billion from a peak of $45.5 billion.

The crises led to the evaporation of foreign capital, the closure of the vital tourism industry, as well as the increase in purchases of strategic goods, in addition to the payment of debts, which led to a strong decline in reserves and thus the weakness of the Egyptian pound.

In addition, Egypt observed a drop in its reserves, as foreign investors have sold their T-bonds during the crises.

In March, the Central Bank revealed that foreign reserves declined to $40.108 billion as of the end of March 2020, down from $45.510 billion at the end of February 2020.

Egypt received in May a $2.4 billion loan from the International Monetary Fund (IMF) under the Rapid Financing Instrument (RFI) to help deal with the impact of the COVID crisis.

In addition, the IMF delivered Egypt the first tranche of another loan under the standby agreement of $ 2 billion, from $ 5.2 billion, while the remaining $ 3.2 billion will be disbursed after two reviews.

As the country's foreign reserves increase, supply increases, causing the pound to appreciate against the US dollar, which is the main currency of reserve assets held by a central bank.