Reuters: China and Egypt on Tuesday concluded an 18 billion yuan ($2.62 billion) three-year bilateral currency swap, a move that importers and economists said would facilitate trade and improve foreign currency liquidity in cash-strapped Egypt.
Egypt’s central bank, which signed the deal with the People’s Bank of China, said the arrangement could be extended by mutual consent.
“This bilateral currency swap is a mutually beneficial arrangement between both countries,” it said in a statement.
The People’s Bank of China said the move was aimed at promoting trade and investment and maintaining financial stability in both countries.
Neither bank gave details on how the Egyptian currency swap would work but economists and businesspeople expect it to have a positive impact on Egypt’s foreign reserve position.
“The position of the central bank is definitely increasing, with more firepower denominated in foreign currency to stabilise the Egyptian pound when needed. So this is definitely something positive,” said Hany Farahat, senior economist at Cairo-based CI Capital.
Egypt has struggled to revive its economy since a popular uprising in 2011 drove away tourists and foreign investors, major sources of foreign currency.
Reserves tumbled from $36 billion in 2011 to around $16.56 billion at the end of last August.
