https://arab.news/wnqf6
RIYADH: Egypt’s official reserve assets surged by nearly 36 percent year on year, reaching $45.05 billion in January, according to recent data.
Figures from the Central Bank of Egypt show that the increase was primarily driven by a sharp rise in the value of gold reserves, which grew by 37 percent over the year, reaching $11.42 billion.
Gold now represents around 25 percent of Egypt’s total reserves, reinforcing its role as a key hedge against global economic volatility and a valuable buffer for the country’s foreign exchange position.
The growth in Egypt’s reserves was not limited to gold. A significant 70 percent rise in other reserve assets also contributed to the overall increase, representing approximately 49 percent of the total reserves.
Data also showed that foreign currency reserves in convertible currencies remained relatively stable, edging up by just 1.05 percent to $11.2 billion in January.
Special Drawing Rights, a form of international reserve asset issued by the International Monetary Fund, witnessed a dramatic decline of 91.55 percent, falling to just $31 million.
This sharp drop suggests that Egypt has likely tapped into its SDR holdings to meet urgent liquidity needs, further highlighting the strain on the country’s foreign exchange resources.
Meanwhile, other foreign currency assets, which include securities and deposits not classified as part of the Central Bank’s official reserve holdings, increased by 18.65 percent, reaching $14.06 billion.
The rise was primarily driven by a surge in foreign deposits outside the official reserves, which rose by 53 percent to $10.17 billion.
The need for enhanced liquidity in Egypt became especially pronounced throughout 2024. The country faced severe foreign exchange shortages, a sharp devaluation of the Egyptian pound, and mounting structural economic pressures.
The Egyptian pound’s decline to a record low on the parallel market exacerbated trade disruptions and investor uncertainty, prompting urgent economic reforms.
In response to these challenges, Egypt secured a landmark $35 billion agreement with Abu Dhabi’s ADQ in February, injecting critical reserves.
In March, the country also received an $8 billion package from the International Monetary Fund, which provided essential support for fiscal and structural adjustments.
The central bank’s decision to float the currency and implement interest rate hikes further helped restore stability.
These policy measures not only helped attract foreign inflows but also boosted remittances, which contributed to the recovery of Egypt’s reserve levels.