The Central Bank of Egypt (CBE) revealed that non-governmental foreign currency deposits (FCDs) in banks operating in the Egyptian market increased by $1.2bn during the first five months of this year. The foreign currency deposit balances rose from $50.4bn in December 2023 to $51.6bn in May 2024.
In May alone, non-governmental foreign currency deposits in banks increased by approximately $780m. Demand deposits in foreign currencies amounted to about $126m, while time deposits and savings certificates reached $39bn.
Banks operating in the local market raised the interest rate on dollar deposits following the US Federal Reserve’s decision to adopt a tighter monetary policy and increase the dollar interest rate to 5.5% to curb inflation.
The growth in foreign savings flowing into banks had a positive impact on the net foreign assets owned by banks and the central bank. In May, there was a surplus of about $14.291bn—the first time in 28 months. Net foreign assets at commercial banks alone rose to about $32.2bn in May, compared to $24.95 bn in April—an increase of approximately 29%.
These foreign assets include the volume of deposits and savings in foreign currency, which are liquid and can be used to meet the bank’s obligations when needed.
The International Monetary Fund (IMF) expects Egypt’s foreign currency inflows from its five primary sources to increase by about $13.7bn, or 14.6%, during the 2023-2024 fiscal year compared to the previous year. This increase is mainly attributed to investments from the Ras El Hikma development project.
