The Central Bank of Egypt (CBE) has revealed that the foreign exchange (FX) reserves increased by $222m to $34.035bn in November 2021, compared to $33.813bn in October 2021.
Egypt’s international reserves consist of FX, gold, special drawing rights (SDRs), and net loans from the International Monetary Fund (IMF).
On Tuesday, the CBE announced that the net international reserves increased to $40.909bn in November 2021, compared to $40.849bn in October 2021, a growth of $60m.
Gold reserves also increased by about $5m to $4.222bn during November 2021, compared to $4.217bn in October 2021. Meanwhile, the SDRs decreased by about $197m to $2.659bn in November 2021, compared to $2.856bn in October 2021.
The SDRs are assets created by the IMF in 1969 to supplement the official reserves of its member countries. The value of SDRs is determined according to five currencies: the US dollar, the euro, the Chinese yuan, the Japanese yen, and the pound sterling.
The international reserves support the local currency, fulfil the country’s foreign obligations, and secure its imports of basic commodities for several months.
The revenues of the Suez Canal Authority, tourism, and exports; foreign investment; and remittances are the most important resources of FX in Egypt.
The IMF expects Egypt’s foreign exchange reserves to recover, thanks to Egypt’s foreign exchange sources achieving record levels in the coming years, as it expected that total foreign exchange reserves would record $44.1bn in 2021/22, and $47.6bn in 2022/23, $51.8bn in 2023/24, and $55.1bn in 2024/25.
Mohamed Abdel Aal, a banking expert, believes that the continued rise in FX reserves means that Egypt does not have any shortcomings in FX liquidity, that all international obligations and dues are paid on time, and that Egyptian banks meet all import credits for strategic commodities.
He added that the rise in FX reserves indicates that traditional FX resources are going within their normal rates. Abdel Aal believes that the positive growth of FX reserves will boost the Egyptian pound’s exchange rate against the US dollar.
The steadfastness of the reserve came in the face of all the negative repercussions that have been going on in Egypt and the world since 2020, against the background of the Coronavirus pandemic, with the support of the CBE’s success in building it strongly before the emergence of the pandemic, and bringing it to unprecedented levels, which are the highest ever in the history of Egypt, as It had reached about $45.510bn in February 2020, which contributed to increasing the central bank’s ability to support the state in light of the COVID-19 crisis.
Ramy Abul Naga, Deputy Governor of the CBE, said earlier that Egypt’s international reserves reached unprecedented peaks before the crisis, and the widespread structural reforms helped Egypt handle external shocks.