Net foreign assets (NFAs) in Egypt’s banking sector shrank for the first time in three months by nearly USD 583 mn to hit USD 17.9 bn in August, marking a 3.3% m-o-m decrease, according to data from the Central Bank of Egypt. On an annual basis, our banking sector has almost doubled its net foreign assets, from USD 9.7 bn in August 2024.

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Why do NFAs matter? Think of NFAs as the banking system’s core financial buffer — the net difference between the foreign currency banks hold (assets like USD and EUR) and what they owe to entities abroad (liabilities). A positive and growing NFA signals health — a strong capacity to cover import bills. In this case, the EGP will generally hold steady or even appreciate. But when NFAs shrink or turn negative, it means we owe more FX than we hold — and that’s when the EGP tends to slide against key foreign currencies.

Commercial banks saw their net foreign assets’ surplus narrowing to USD 7.3 bn in August, down from the USD 8.0 bn seen in July. Foreign assets in commercial banks fell to USD 38.7 bn in August, down from USD 39.4 bn a month earlier, while liabilities marginally inched down to USD 31.47 bn during the month.

The central bank recorded an increased surplus of nearly USD 10.7 bn by the end of August, up from USD 10.5 bn in July. Foreign assets at the CBE inched up to just under USD 48.1 bn, up from USD 47.8 bn a month earlier, while liabilities edged up to USD 37.4 bn, from USD 37.3 bn in July.

The dip is no reason to be alarmed, as a “decrease one month might be followed by an increase the next, indicating normal, routine movement,” Ahly Pharos Head of Research Hany Genena told EnterpriseAM. HC Securities’ Heba Mounir similarly pointed to the change as a result of “regular month-on-month liabilities,” with August welcoming numerous LNG shipments to meet heightened energy demand and dues paid out to the IMF at the start of the month.

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