Central banks are boosting USD reserves: The number of central banks increasing their exposure to the USD is increasing this year as a move towards de-dollarization stalls amid a need for liquidity and higher interest rates in the US, according to an annual survey by the Official Monetary and Financial Institutions Forum (OMFIF). A net 18% of global central banks plan to increase their USD allocation over the next one to two years to combat heightened US interest rates, up from just 6% last year.

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The increase marks a break from a gradual decline in USD reserves, after changes in global trade and geopolitical tensions — including sanctions on Russia — had prompted some economies to reduce their reliance on the greenback. Now, demand for the CNY has stalled in favor of the USD, driven by “expected higher returns from the US, where rates are forecast to remain higher than in China.”

Fast facts: The USD currently accounts for nearly 58% of global reserves, according to IMF data picked up by the Financial Times.

Gold reserves are also seeing an uptick in demand, with the proportion of central banks’ reserves held in gold rising from 9% to 11% over the past year, and a net 15% eyeing further increases to their gold holdings in the next one to two years.

A 10-year view still sees a “very gradual decline in the USD’s share of global reserves” to an average allocation of 55% USD compared with 5.5% for the CNY, in line with trends over the past decade, according to OMFIF Managing Director Nikhil Sanghani.

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THE CLOSING BELL-

The EGX30 fell 2.9% at yesterday’s close on turnover of EGP 2.3 bn (51.6% below the 90-day average). Local investors were net sellers. The index is up 3.1% YTD.

In the green: Palm Hills Development (+6.9%), Elsewedy Electric (+1.1%), and Juhayna (+0.3%).

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CORPORATE ACTIONS-

Kima wraps up EGP 4 bn capital increase:State-controlled Egyptian Chemical Industries (Kima) has successfully increased its issued capital to EGP 9.9 bn, after wrapping up the second phase of its EGP 4 bn capital raise subscription on Thursday, Kima said in an EGX disclosure (pdf).

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