The Central Bank of Egypt (CBE) has reported an increase in net foreign reserves to $35.173 billion by the end of November 2023, compared to $35.102 billion at the end of October 2023. The increase amounts to $71 million.
Egypt’s monthly imports of goods and products from abroad average around $7 billion, with an annual total exceeding $70 billion. As a result, the current average foreign exchange reserve covers approximately 5 months’ worth of merchandise imports, which is higher than the global average of 3 months’ worth. This level of reserves ensures the security of Egypt’s commodity and strategic needs.
Read more: Egypt reports $146 mn increase in forex reserves
Egypt’s foreign exchange reserves consist of a diversified basket of major international currencies, including the United States (U.S.) dollar, the Euro, the British pound, the Chinese yuan, and the Japanese yen. Furthermore, the allocation of Egypt’s holdings is determined based on the exchange rates and stability of these currencies in international markets. This allocation may be adjusted according to a plan devised by the officials at the Central Bank of Egypt.
Function and purpose
The primary function of Egypt’s foreign exchange reserves, comprising gold and international currencies, is to facilitate the purchase of commodities, payment of foreign debt premiums and interest, and to address economic crises in exceptional circumstances, utilizing resources from hard currency-generating sectors that may be affected. These sectors include exports, tourism, and investments, which may experience disruptions. Additionally, other sources such as Egyptian remittances from abroad (which have reached a record level) and stable revenues from the Suez Canal contribute to supplementing the reserves in certain months.
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