Egypt’s foreign reserves increased slightly to $40.1 bln by end of January: CBE

Foreign reserves ticked up $ 38.2 mn in January to end the month at $ 40.1 bn, according to central bank figures released yesterday.

Foreign reserves had made a significant comeback in December, rising by almost USD 800 mn to their highest level since April.

The FX stockpile had fallen by around $ 10 bn between March and May 2020 when the central bank stepped in to cover portfolio outflows, meet debt repayments, and pay for commodity imports during the global selloff of emerging market assets prompted by covid-19.

In September 2019, Egypt’s NIRs recorded an all-time high of $45.1 billion, before witnessing an immense fall in March 2020, reaching $40 billion, driven by the unprecedented blow to global financial markets arising from the COVID-19 pandemic.

COVID-19 has caused the sharpest portfolio flow reversal on record for emerging markets, including the Egyptian market, according to the CBE.

As of the end of June 2020, Egypt’s NIRs started to bounce back for the first time since March, increasing to $38.2 billion, up from $36 billion in May.

CBE Governor Tarek Amer said in previous statements that mid-June witnessed a strong return of foreign investors to the Egyptian financial market, in light of the global market recovery and the successful efforts by the Egyptian government to contain the pandemic and its repercussions.

Despite a 39 percent drop in its foreign direct investments (FDI) inflow, Egypt managed to maintain its position as the country with the most FDI inflows in Africa with $5.5 billion in 2020, according to the UN Conference on Trade and Development (UNCTAD).