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Egypt’s net foreign assets continued to decline in October

City, Street, Urban Reuters/Mohamed Abd El Ghany
Egypt's annual urban consumer inflation quickened to a five-year high of 18.7% in November 2022

Egypt’s net foreign assets (NFAs) fell by EGP 109.9 billion ($4.47 billion) in October, extending a decline that began in September 2021, central bank data showed.

The decrease works out to about $228 million after calculating for devaluations during October.

Russia’s invasion of Ukraine in February sparked a currency crisis that led to Egypt to begin negotiating with the International Monetary Fund (IMF) for a financial assistance package.

The central bank had been relying on NFAs, which represent banking system assets owed by non-residents minus liabilities, to help support the currency. They include foreign assets held by the central bank.

The central bank in October had been allowing the pound to fall in increments of about EGP 0.01 per working day, but on October 27 devalued it by 14.5 percent in one go as part of the $3 billion support package it concluded with the IMF last month.

NFAs fell to a negative EGP 551.0 billion at the end of October from a negative EGP 441.1 billion a month earlier.

NFAs stood at a positive EGP 248 billion in September 2021, before the decline began. Russia’s invasion of Ukraine in February sparked further investor unease, unleashing an even bigger flood of outflows.

Changes in the amount of NFAs represent net transactions of the banking system with the foreign sector, including those of the central bank, according to the bank.