The Central Bank of Egypt (CBE) is expecting $2bn in funding from the United Arab Emirates this week to support its foreign exchange reserves.
Crown Prince of Abu Dhabi Mohammed bin Zayed Al Nahyan announced on Friday that the UAE has decided to provide $4bn to support Egypt, of which $2bn will be deposited into the CBE, while the other $2bn will be directed to investing in developing areas across Egypt.
CBE Sub-governor of the Banking Supervision Unit Tarek Fayed hopes to receive the deposit this week.
This funding will support the CBE’s foreign exchange reserves, as it will contribute to strengthening the CBE’s efforts in fighting against speculations of the dollar in the informal market, Fayed said.
The CBE announced that the balance of the foreign exchange reserves increased to $16.561bn in March, and is expected to increase to about $18.5bn, after receiving funding from the UAE.
Chairperson of the Agricultural Development Bank (ADB), El-Sayed El-Kosayer, said that the new funding is expected to contribute to strengthening the value of the Egyptian pound against the US dollar and will increase the balance of foreign exchange reserves in the CBE.
Traders in the informal market for currency trading said the dollar exchange price declined to below EGP 11 following the announcement of the UAE’s funding compared to EGP 11.6 last Thursday.
CBE Governor Tarek Amer is targeting to reach $25bn foreign exchange reserves before the end of the year.
He did not disclose the procedures that he will carry out to increase the size of the reserves.
The UAE deposited $2bn in the CBE in April 2015, with an interest rate of 2.5%, while the interest rate of the new funds has not yet been disclosed.