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Net foreign assets (NFAs) in Egypt’s banking sector continued to rise in October, reaching USD 22.7 bn, rising more than 9% (USD 1.9 bn) from September, according to data from the Central Bank of Egypt. On an annual basis, our banking sector more than doubled its net foreign assets, from USD 9.2 bn in October 2024.
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The improvement reflects an increase in foreign currency inflows, particularly from remittances and foreign investments in treasury bills, economist Hany Abou El Fotouh told EnterpriseAM. However, he noted that despite the positive rise in net foreign assets, the improvement remains tied to temporary factors such as foreign investment and remittance inflows, which makes it unlikely to be sustainable in the long term unless it is supported by genuine structural reforms.
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 that 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.
Data breakdown: Commercial banks’ net foreign assets recorded a surplus of USD 10.9 bn in October, up from the USD 9.8 bn seen in September. Foreign assets in commercial banks increased to USD 43.3 bn, up from around USD 41.7 bn a month earlier, while liabilities increased to USD 32.4 bn during the month.
The central bank recorded a surplus of nearly USD 11.8 bn by the end of October, up from USD 11.1 bn in September. Foreign assets rose to USD 49.2 bn during the month, slightly up from USD 48.6 bn a month earlier, while liabilities inched down slightly to USD 37.4 bn from 37.5 bn in September.
