Egypt-UAE currency swap to lure foreign cash, reduce borrowing spree: HDB chair
Egypt’s recent $1.4 billion currency swap agreement with the UAE will help the North African country secure hard currency and ease borrowing pressure, said chairman of Housing and Development Bank (HDB) on Sunday.
On Friday, the Central Bank of Egypt (CBE) and the Central Bank of the UAE (CBUAE) have signed a local-currency swap agreement. The deal will allow for the exchange of local currencies between the countries’ central banks up to 5 billion dirhams and 42 billion Egyptian pounds.
“The bilateral currency swap agreement between the CBE and the CBUAE comes in line with Egypt’s efforts to help the foreign exchange market maintain its stability, boost relations, as well as facilitate and boost the bilateral trade of exchange between the two countries.” HDB’s Hassan Ghanem said.
Ghanem explained that the agreement plays a crucial role in reducing reliance on the U.S. dollar for trade and lowering the deficit in the country’s balance of payments through enabling bilateral transactions in other currencies. “This will help stabilise the exchange rate of the Egyptian pound.”
The currency swap agreements are one of the most effective methods to secure foreign currency, support Egyptian government and central bank’s plans to move away from the adverse and costly effects of the borrowing spree, the Egyptian banker added.
It will also help meet domestic demands for commodities and services, promote exportation of made-in-Egypt products overseas, pave the way for more currency swap agreements with other countries to boost foreign direct investments in the country, he concluded.