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Wednesday, 7 December 2016

Egypt signs currency swap agreement with China

So long, roz. Hello, steamed rice: The Central Bank of Egypt announced it has signed an agreement with the People’s Bank of China, entering into a bilateral currency swap for a total amount of CNY 18 bn (equivalent to around USD 2.62 bn) against the equivalent in EGP. The agreement is valid for three years, with an option to extend by mutual consent. The CBE says the agreement demonstrates “the strong international support” Egypt received “to its homegrown reform program. Additionally, it complements a series of measures taken which aim to unleash the vast potential of the Egyptian economy and instill confidence by bolstering economic activity.” A government official also reportedly told Al Borsa that the CBE is considering negotiating another loan swap with one of the G7 countries “to decrease the demand for the USD.”

…Separately, a source at the CBE confirmed to Al Masry Al Youm that CBE reserves are on track to reach USD 25 bn by year-end and denied there would be changes in the composition of its board of directors. CI Capital’s Hany Farahat agrees, telling Bloomberg that hitting the USD 25 bn target by the end of the month is now “very likely” and that the “larger reserves mean stronger firepower on part of the central bank, which should boost confidence in the pound and support the flotation process.”

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