Net foreign assets hit fresh high of USD 18.5 bn in July

Net foreign assets (NFAs) in Egypt’s banking sector jumped 23.7% m-o-m in July, reaching USD 18.5 bn, according to data from the Central Bank of Egypt. July’s figure represents a 39.7% y-o-y increase and surpasses the USD 15.4 bn high recorded in March.

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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 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.

The numbers behind the surge: Commercial banks’ net foreign assets recorded a surplus of USD 7.99 bn in July, a significant increase from the USD 4.9 bn seen in June. Foreign assets in commercial banks increased to USD 39.4 bn, up from around USD 36.2 bn a month earlier, while liabilities inched up to USD 31.5 bn during the month, up from USD 31.3 bn in June.

This shows that the banking sector has sufficient FX reserves to meet external obligations — one of the most important measures reflecting the sector’s resilience in the face of challenges, banking expert Mohamed Abdel Aal told EnterpriseAM.

The central bank recorded a surplus of nearly USD 10.5 bn by the end of July, up from USD 10.1 bn in June. Net foreign assets reached USD 47.8 bn during the month, slightly up from June’s USD 47.4 bn, while liabilities held steady at USD 37.31 bn.

The increase came despite challenges: The improvement of our NFA position for the third consecutive month came despite Suez Canal revenues continuing to suffer and our fifth IMF review getting pushed back, delaying the disbursement of the fifth tranche initially expected in July, Abdel Aal said.

How did we do it? The dip in Suez Canal revenues, which costs Egypt around USD 5-6 bn every year, has been offset by a 24% y-o-y rise in tourist numbers in 1H 2025 and a jump in remittances from Egyptians abroad, Al Ahly Pharos Head of Research Hany Genena wrote in a Moharram & Partners report (pdf) diving into the state of the Egyptian economy. “Hence, Suez Canal revenue turned from a major source of foreign currency inflows into a mere option that could be exercised if military activity at the Strait of Bab El Mandab draws to a close” Genena wrote.

Abdel Aal agrees, telling us that the increase in NFAs can be attributed to rising FX inflows from both traditional and non-traditional sources — remittances, tourism, and exports, as well as increased hot money inflows. He explained that hot money inflows were driven by the real interest rate differential between the EGP and the USD, exchange rate stability, and a relative easing of geopolitical tensions.

ICYMI- Egypt recorded its highest-ever monthly USD inflows in July, reaching USD 8.5 bn, Prime Minister Moustafa Madbouly said last week. These inflows, which excluded hot money, came from all state sectors, including a historic surge in remittances.

Moving forward: Abdel Aal expects NFAs to continue their upward trajectory in the coming months and until the start of the new year. A USD 7.5 bn investment package from Qatar should help support the EGP and offset the inflationary pressures likely to arise from upcoming fiscal consolidation measures, Genena wrote.