NFAs improved to minus EGP 494.3 billion from November 2022’s minus EGP 541.5 billion, up around $2.06 billion
Egypt’s net foreign assets (NFAs) rose by EGP 47.28 billion in December 2022 for the second consecutive month, explained the Central Bank of Egypt (CBE). The CBE pointed out that the increase occurred after it allowed the EGP to depreciate in October.
NFAs improved to minus EGP 494.3 billion from November 2022’s minus EGP 541.5 billion, up around $2.06 billion using end-of-month central bank exchange rates, according to Reuters calculations.
NFAs stood at a positive 248 billion pounds in September 2021, before the decline began.
Prior to the devaluation in October, the CBE relied on NFAs - banking system assets owed by non-residents minus liabilities, including CBE-held foreign assets – to support the EGP.
Since last year, the EGP has lost around 50% of its value after the Russian/Ukrainian war kicked off a sharp decline in tourism, foreign investor withdrawal of more than $20 billion from the treasury market, and increased prices of imported commodities.
In the past 12 months, the central bank has approved the devaluation of the EGP against the USD four times - March, October, December 2022, and early January, resulting in the largest single-day fall since October.
Related > Egyptian banking sector able to withstand additional EGP devaluation | Fitch Ratings
The CBE allowed the EGP to decline as part of the conditions for IMF’s $3 billion support package.
Changes in the amount of NFAs represent net transactions of the banking system with the foreign sector, including those of the central bank, according to the bank.