Foreign reserves hold steady in March

Egypt’s foreign reserves inched up to US$16.56 billion at the end of March, up from US$16.53 billion in February, the Central Bank of Egypt announced on Tuesday.

Reserves have held relatively steady since October 2015, but are less than half of their pre-2011 revolution level.

A widening balance of payments deficit has put pressure on Egypt’s reserves. Data for the first half of the current fiscal year shows that hard currency inflows from tourism, remittances, exports and the Suez Canal all fell year-on-year, leading to a BoP deficit of US$3.4 billion, up from US$1 billion a year earlier.

Central Bank Governor Tarek Amer told Bloomberg news he hopes to save US$20 billion this year by curbing “unnecessary imports.” In a televised interview in February, Amer said he would not allow the Egyptian pound to float freely until reserves reached US$25-30 billion.

Amer did allow a significant devaluation of the pound last month, dropping the official dollar exchange rate from LE7.73 to LE8.85 on March 14, before strengthening it again to LE8.78, where it remains.

In addition to offering US$120 million a week to banks in regular currency auctions, the Central Bank made available around US$2.4 billion in extraordinary auctions during the month of March.