Egypt, UAE ink $1.4bn local-currency swap agreement
The North African nation is also exploring a currency swap agreement with China to achieve financial stability
Egypt has signed a local-currency swap agreement worth around $1.4 billion with the UAE, allowing for the exchange of local currencies between the two countries’ central banks up to 5 billion dirhams and 42 billion Egyptian pounds.
The deal was signed by Central Bank of the UAE Governor Khaled Mohamed Balama and his Egyptian counterpart Hassan Abdullah.
“In line with the efforts of the UAE and Egypt’s leadership to collaborate more broadly across multiple areas, the CBUAE is keen to deepen its cooperation with the CBE (Central Bank of Egypt) to achieve common interests, positively impact the trade, investment, and financial sectors, and enhance financial stability,” Balama said on 28 September.
A currency swap agreement is a legally binding contract between two parties that outlines the terms and conditions under which they will exchange currencies and make periodic interest payments.
In March 2022, Abu Dhabi’s sovereign wealth fund agreed to invest about $2 billion in Egypt by buying stakes in state-owned assets in some companies, including the largest private bank listed on the Egyptian Stock Exchange.
The deal included the purchase of state-owned shares in some companies and banks, including 18 percent of the Commercial International Bank, and government shares in four companies listed on the stock exchange, including Fawry Banking and Payment Technology Services.
Egypt is battling its worst foreign-currency currency in years, as the pound has shed nearly half of its value against the US dollar since early 2022, allowing it to lose almost half its value against the dollar. The International Monetary Fund (IMF) has called on Cairo to allow for “true flexibility” in the currency before it lends more money to the battered nation under a $3 billion rescue program.
A day before signing the UAE deal, Abdullah met his Chinese counterpart Pan Gongsheng in Beijing, where the two discussed various topics intending to enhance economic and financial cooperation.
A currency swap agreement was at the top of the list, as the two officials stressed the need to improve the partnership between nations.
The discussions also included the Egyptian government’s plan to issue panda bonds denominated in Chinese yuan and establish a stronger bank presence in each other’s county to enhance financial integration.
Earlier this month, Egypt was among six nations formally invited to join the BRICS+bloc of emerging economies.
The country also finds itself in the middle of a major scandal in the US in relation to bribery and corruption allegations levied against Senator Bob Menendez, who is accused of taking bribes in exchange for his influence as the head of the Senate Foreign Relations Committee to benefit Egypt.