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Wednesday, 8 April 2020

Egypt’s foreign reserves dip USD 5 bn in March

FX reserves dip in March for the time in 14 months: Foreign reserves dipped USD 5.4 bn in March to USD 40.1 bn from USD 45.5 bn in February, marking the first month in over a year that reserves have declined m-o-m, the Central Bank of Egypt (CBE) said in a statement (pdf). The drop came as the CBE dipped into its savings to cover portfolio outflows and fund imports of basic commodities, according to the statement.

Despite the hit, reserves are still good to cover Egypt's import bill for at least eight months, which is higher than the international standard of three month, the CBE said.

Falling remittances from Egyptians abroad and the hit to the tourism trade could put more pressure on foreign reserves in the coming months, Ehsan Khoman, head of Middle Eastern research at MUFG Bank said, according to Bloomberg. Remittances currently account for 8.8% of Egypt’s GDP. Our remittances rose 13.5% y-o-y in 1H2019-2020, helping to narrow our current account deficit during the first six months of the fiscal year.

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