Egypt's commercial banks provided dollars to investors in March, helping keep the Egyptian pound currency stable during a bond selloff, Bloomberg reported on Thursday. The net foreign liability position among Egyptian lenders reached $3.5 billion in March, a reversal from February when they had net foreign assets of $7.9 billion, according to central bank data released on Thursday. Egypt made $13.5 billion of outflows in March, as foreign holdings in local securities fell almost by half. The Egyptian central bank partially covered the pullback of overseas portfolio capital through its foreign-exchange repatriation mechanism, which guarantees investors can withdraw profits in hard currency. As a result, Egypt's net international reserves dropped by a record of $5.4 billion last month. In a replay of an emerging-market rout that spilled into Egypt in 2018, the latest exodus by investors also failed to rattle the pound currency, according to Bloomberg. Once a beneficiary of one of the world's most profitable carry trades, Egyptian pound is still the second-best performing currency against the dollar this year. In March, it depreciated less than 0.9 percent against the U.S. currency, compared to falls of over 12 percent for South Africa's rand, Brazil's real, and the Russian ruble. Maintaining stability in the currency market may start to get easier, after global uncertainty stemming from the coronavirus outbreak affected the portfolio investments in emerging markets. In Egypt, bond outflows slowed to $529 million in April from $3 billion in March, Ahmed Hafez, head of research for the Middle East and North Africa at Renaissance Capital, told Bloomberg. Egypt has also moved to shore up confidence this April by asking the International Monetary Fund (IMF) for fresh funding under a stand-by agreement in addition to the lender's rapid financial instrument. The Egyptian central bank's net international reserves were at $40.1 billion as of the end of March. "We have definitely seen the worst of the capital flight," Hafez further told Bloomberg. "Banks are likely to have covered part of the capital flight that the country witnessed in March. We are not overly concerned as we have been there post the 2018 sell-off and recovered fairly well. Also, the central bank has enough buffers to cover the net liabilities."
