Cairo – Mubasher: The Central Bank of Egypt (CBE) may consider a policy of voluntarily reducing its cash reserves to finance foreign investors’ exit from the government’s treasury bills (T-bills), EFG Hermes managing director and head of research Ahmed Shams El Din said, indicating that this would happen if the CBE reduces interest rates.
The CBE is likely to drop its policy of bolstering its foreign exchange reserves in order to support investment and operations, Middle East News Agency (MENA) reported, citing Shams El Din as saying.
Should foreign investors fully exit their T-bill investments, this could result in a drop of only $3 billion in cash reserves, Shams El Din said, indicating that this figure was not a big one and would not have a major impact on the CBE’s foreign reserves, which would be sufficient to bring in exports for another seven months.
Foreign investments in the government’s T-bill currently amounts to around $12 billion, while over the past two years, the CBE has worked continuously to build its foreign reserves.
In Q1-18, foreign investments in the Egyptian government’s T-bills exceeded $23 billion, however, that figure did not have the major positive impact that was expected, Shams El Din explained. He added that when around $11 billion had exited, the effect was not as negative as expected, which proves that the CBE is not under any pressure or need to maintain foreign investments in T-bills.
Egypt's foreign reserves increased to $44.51 billion by the end of November 2018, CBE data showed earlier this month up from $44.501 billion in October.
Prior to the 25 January 2011 revolution, Egypt’s foreign reserves amounted to around $36 billion.
https://english.mubasher.info/news/3379007/Egypt-s-foreign-reserves-hit-44-51bn-in-November
