The Net International Reserves (NIR) registered a record increase of $4.7 billion to reach $36.04 billion in July; its highest since December 2010. The reserves decreased by half throughout the four years following the 25 January Revolution as the political turmoil drove away investors and tourists draining main sources of foreign currency. Also, during this period the Central Bank used to protect the dollar/pound exchange rate by withdrawing from the reserves pushing it to $19 billion in October. However, the NIR started to inch up starting November last year after Egypt floated its currency and eased capital controls. This prepared for finalising a $12 billion loan deal with the IMF out of which Egypt received $4 billion so far. “The reason the reserves increased is the amount of inflows during July and the reform moves we took by the end of June, which really contributed to the strong inflows during the month,” Finance Minister Amr Al-Garhi told Reuters. While the Central Bank did not reveal the breakdown of this increase, observers believe that the receipts of Eurobonds, the second tranche of the IMF loan which was delivered in July together with the foreigners' purchases of Egyptian treasuries contributed to the increase. Foreign interest in the local securities jumped after the CBE increased the interest rates by seven per cent since November. According to Bloomberg, more than $13 billion have flowed into Egyptian Treasury Bills as of 25 July. Most of those funds, are not included in the reserves figure as they go into the Central Bank's “repatriation fund” that guarantees transfer of money for foreign investors. Another possible contributor to the increase is the improvement of trade deficit which fell by 43.8 percent year-on-year in May as imports declined by $1.63 billion.
