Net foreign assets in Egypt’s banking sector dropped to USD 5.96 bn in November, down from USD 9.2 bn in October, marking a sharper monthly decline of 35.2%, according to EnterpriseAM calculations based on data from the Central Bank of Egypt. This is the second consecutive monthly drop as pressure on foreign currency resources increases.

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This decline was attributed to the worsening deficit in the net foreign assets of commercial banks, which dropped to a deficit of USD 5.84 bn, compared to a USD 1.4 bn deficit in October. Foreign liabilities saw a decrease in both commercial banks and the CBE to a total of 61.07 bn by the end of November, compared with USD 63.16 bn in October.

The central bank helped cushion the fall, with the bank recording both a decrease in its liabilities and slight increase in its foreign assets in November, which rose to USD 45.44 bn, up from USD 44.84 bn in October. This increase of net foreign assets in the central bank by approximately USD 1.2 bn to USD 11.8 bn helped support the overall position of the banking system net foreign assets during the month.

The country’s net foreign asset surplus has shrunk 58% since its May 2024 peak of USD 14.3 bn in May 2024, while commercial banks have now clocked in their fourth consecutive month recording a net foreign asset deficit.

Remember: The May peak marked the first time that net foreign assets recorded a surplus in over two years, which followed the second and final tranche of the USD 35 bn Ras El Hekma agreement bringing in some USD 14 bn of fresh inflows — USD 6 bn of which the central bank poured into the nation’s banking sector. Before this, the country’s net foreign asset position had been in a deficit since February 2022, when the Russian invasion of Ukraine triggered a shock capital outflow of almost USD 20 bn.

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