Egypt’s net foreign liabilities narrowed by USD 800 mn in July, driven by a slight easing in FX liquidity in the banking sector, according to central bank figures out last week. The country’s net foreign asset position improved to negative USD 26.3 bn from negative USD 27.1 bn in June, according to our calculations.

Thank the banks: The slight improvement was driven by a decline in the banking system’s net liabilities, which narrowed some 5% to USD 16.17 bn in July from USD 17.13 the month before. Meanwhile, liabilities at the central bank widened slightly to USD 10.13 bn from USD 9.98 bn in June.

Remember: Egypt has been suffering a prolonged FX crunch triggered by the global shock caused by Russia’s war in Ukraine and rising interest rates. The EGP has lost almost half of its value against the greenback since March 2022, fuelling a resurgent parallel currency market where the EGP is currently trading at a around an 18 % discount to the official rate, placing further pressure on FX liquidity in the banking system.

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