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Gold, SDRs’ November decline interrupts Egypt’s net international reserves growth run - Daily News Egypt

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Gold, SDRs’ November decline interrupts Egypt’s net international reserves growth run

Egypt's FX reserves increased by about $352m to $35.035bn: CBE

Egypt’s net international reserves inched up to $39.221bn in November, compared to $39.220bn in October 2020, the Central Bank of Egypt (CBE) revealed on Sunday.

Egypt’s international reserves consist of foreign currencies (FX), gold, special drawing rights (SDRs), and net IMF loans.

The decline in gold and SDRs has affected the international reserves’ growth run during November.

The FX reserves increased by about $352m to $35.035bn in November compared to $34.683bn in October, while the gold reserves decreased by about $246m to about $4.083bn, compared to about $4.328bn in the comparison period. The balance of SDRs also decreased by $104m to $110m in November compared to $214m in October.

The CBE’s international reserves recorded unprecedented historic levels during 2019 reaching $45.419bn at the end of the year, compared to $42.61bn in January 2019. They then declined during March, April, and May due to the novel coronavirus (COVID-19) crisis, before rising again starting from June 2020.

The Arab Monetary Fund (AMF) confirmed that Egypt’s international reserves are very stable and at comfortable levels covering eight months of imports.

In statement, CBE Deputy Governor Ramy Aboul Nagahad indicated that the building of international reserves at unprecedented levels before the crisis, and the widespread implementation of structural reforms, made the people of Egypt more prepared to face external shocks.

The purpose of the reserves is to support the currency, fulfil the country’s foreign obligations, and guarantee its imports of basic commodities for several months.

The size of the reserve for any country represents a source of strength or weakness according to its value and its ability to fulfil the state’s foreign exchange obligations.

The resources of the Suez Canal Authority, tourism, export, foreign investment, and remittances of workers abroad are the most important resources that feed Egypt’s reserves.

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