The foreign assets of Egyptian banks plummeted by 45 percent, or 162.12 billion Egyptian pounds, in March, Central Bank of Egypt (CBE) data showed on Thursday, in another sign of how the coronavirus is halting emerging market economies. The sharp decline, which equates to $10.34 billion, indicates commercial banks were picking up the slack to meet heavy demand for dollars as foreign investors fled the Egyptian treasuries market during the pandemic, economists said. Foreign investment in Egyptian treasuries stood at between $13.5 billion and $14 billion, Finance Minister Mohamed Maait told Al Arabiya news channel on April 9. Foreign investors held nearly $20 billion in treasury bills alone as of the end of February, according to CBE data. The foreign assets of banks dropped to 196.66 billion pounds at the end of March from 358.78 billion at the end of February, the data showed. Foreign liabilities at banks rose to 251.36 billion pounds in March from 235.77 billion pounds over the same period. “Commercial banks were selling dollars to meet heavy foreign exchange demand as the carry trade unwound,” said an economist based outside of Egypt. “It's exactly expected that banks cleared the rest of the outflows which the CBE didn't,” an Egyptian economist said. The central bank did not immediately comment when contacted by Reuters. The country's foreign reserves dropped by $5.4 billion to $40.1 billion in March, the central bank said earlier this month. Egypt has kept the pound mostly steady at 15.70 against the dollar since mid-March, bucking a trend among other emerging markets to allow their currencies to weaken.
