SCZONE showcases investment opportunities to eight Japanese companies    Egypt urges Israel to accept Gaza deal amid intensifying fighting    Egypt, ADIB explore strategic partnership in digital healthcare, investment    Egypt's PM meets Tokyo governor, witnesses signing of education agreements    Egypt welcomes international efforts for peace in Ukraine    Al-Sisi, Macron reaffirm strategic partnership, coordinate on Gaza crisis    Egypt's Sisi, France's Macron discuss Gaza ceasefire efforts in phone call    Contact Reports Strong 1H-2025 on Financing, Insurance Gains    Egypt, India's BDR Group in talks to establish biologics, cancer drug facility    AUC graduates first cohort of film industry business certificate    Egypt to tighten waste rules, cut rice straw fees to curb pollution    Indian tourist arrivals to Egypt jump 18.8% in H1-2025: ministry data    Egyptian pound down vs. US dollar at Monday's close – CBE    Egypt prepares unified stance ahead of COP30 in Brazil    Egypt recovers collection of ancient artefacts from Netherlands    Egypt harvests 315,000 cubic metres of rainwater in Sinai as part of flash flood protection measures    Egypt, Namibia explore closer pharmaceutical cooperation    Fitch Ratings: ASEAN Islamic finance set to surpass $1t by 2026-end    Renowned Egyptian novelist Sonallah Ibrahim dies at 88    Egyptian, Ugandan Presidents open business forum to boost trade    Al-Sisi says any party thinking Egypt will neglect water rights is 'completely mistaken'    Egypt's Sisi warns against unilateral Nile measures, reaffirms Egypt's water security stance    Egypt's Sisi, Uganda's Museveni discuss boosting ties    Egypt, Huawei explore healthcare digital transformation cooperation    Egypt's Sisi, Sudan's Idris discuss strategic ties, stability    Egypt to inaugurate Grand Egyptian Museum on 1 November    Greco-Roman rock-cut tombs unearthed in Egypt's Aswan    Egypt reveals heritage e-training portal    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Egypt sees increase in foreign reserves: CBE
Published in Daily News Egypt on 27 - 01 - 2010

In these troubled economic times most investors have been looking for any glimmer of hope for their country's economy. One such glimmer recently arrived here when the Central Bank of Egypt issued a report claiming a large rise in the nation's foreign reserves.
The CBE's report released Saturday estimates that foreign reserves had reached about $34.1 billion by the end of November 2009, compared to $31.3 billion at the end of the last fiscal year 2008/09 which ended in July 2009.
The CBE's net foreign reserves experienced an increase of $2.8 billion by the end of November 2009, in comparison with its levels in June of the same year, according the report.
Most of the reserves come in the form of securities, standing at $29 million, the next largest contributors being IMF reserves, SDRs, and gold evaluated at market price.
The results are in sync with regional peers such as Jordan, which had an impressive 40 percent increase in foreign reserves by year's end from 2008 levels. The increase was in large part due to a policy change in the Central Bank allowing a wider interest rate differential against the American dollar in favor of the Dinar, effectively encouraging banks and depositors to keep funds in Dinars.
The boost in foreign reserves allows both countries to demonstrate their immunity to the global economic turmoil and the recent economic and liquidity issues faced by the GCC countries.
It also represents a second year of foreign reserve growth for Egypt (reserves grew by 3.7 percent in 2008) in spite of a $378 million drop in reserves in February. Foreign reserves resumed positive recordable moves again when in June 2009 they reached $31.63 billion against $31.31 billion in May 2009. The reserve level had one of its largest jumps in August going up to $32.91 billion, from $31.63 billion a month earlier.
According to the bank, the rise was due to "both the currency in circulation outside the banking system by LE 9.1 billion or 7.7 percent and demand deposits in local currency by LE 2.6 billion or 4 percent.
The CBE report also noted that the volume of foreign debt had declined by about $2.4 billion to $31.5 billion at the end of June 2009 as a result of paying $1.1 billion of loans and facilities. It was also due to the decline in exchange rates of most currencies borrowed against the US dollar.
The move comes at a time when many countries are trying to improve their reserves to advance economic security. With the global financial architecture in a state of flux, prominent voices are calling for a shift away from the traditional dollar centric reserve system.
The total volume of domestic debt had increased to LE 813.7 billion ($160 billion) at the end of September 2009. The volume includes government debt of 75.5 percent, public and economic bodies 6.8 percent and the National Investment Bank 18 percent.
On the other hand, the report showed an increase in domestic liquidity by LE 16.5 billion ($3 billion), to record LE 847.8 billion ($170 billion) in October 2009, by an increase of 2 percent compared to the month of July 2009.
Central Banks usually keep most of their reserves in fairly stable governmental fixed income securities, such as the US treasuries. The value of fixed income securities usually climb when interest rates decline.
For example, as per the US Federal Reserve Statistics, the rates on the 10-year US treasuries went down from 3.72 percent in June 2009 to 3.40 percent in November 2009.
The same happened with the rates on the seven-year US treasuries going down from 3.37 percent in June 2009 to 2.92 percent in November 2009.
This would mean that the lower interest rates on these fixed income securities resulted in an increase in the value of these securities in November 2009, which could be one of the contributing factors for the increase in the value of the CBE reserves in November.
Investing in US treasuries is not particular to Egypt. Foreign demand for long-term US financial assets jumped sharply in November 2009. Analysts viewed the big increase as a sign of renewed optimism among foreign investors about economic growth prospects in the United States and a flight to safety by investors worried about debt problems in Dubai and European nations such as Greece.
Successfully heightening reserves comes as good news for the government of Prime Minister Ahmed Nazif, which aims to establish Egypt as a safe destination for investment and commerce.
Over the past year inflation rates experienced a precipitous drop from a peak of 23.6 percent in August 2008 to hover at around 13-14 percent, and Egypt has maintained growth rates over 4 percent of GDP.
These developments coupled with the growth in foreign reserves and continued reforms are sure to bode well for Egypt's investment future.


Clic here to read the story from its source.