A currency exchange agreement was reached on Thursday by the central banks of Egypt and the United Arab Emirates, which could support the faltering Egyptian economy.
The two central banks would be able to exchange up to 5 billion Emirati dirhams and 42 billion Egyptian pounds, or roughly the equivalent of $1.36 billion, according to a joint news statement.
In the last 18 months, the value of the Egyptian pound relative to the dollar has dropped by more than 50%, and there is currently a foreign currency shortage in the nation.
Egypt, the most populated nation in the Middle East, imports more grain than any other country on earth. It has been severely impacted by the aftermath of the Ukraine war because historically, its supplies have originated from Eastern Europe.
Egypt’s annual inflation rate this month was 39.7%, more than double the 15.3% it registered in the same period the year before.
Currency swap agreements are typically used when countries want to support their domestic and central banks by giving them more liquidity in the form of foreign currency.
An economist with expertise in the Middle East and North Africa, James Swanston, remarked that it “appears that the UAE is once more giving Egypt financial support.” “The central bank of Egypt needs more weapons to support its currency.”
Since taking office in 2013, President Abdel Fattah el-Sissi’s government has had strong support from the UAE and other Gulf governments. Since then, it is estimated that more than $100 billion in Gulf funds have flowed to Cairo via Central Bank deposits, fuel assistance, and other forms of assistance.
The leaders of the central banks of Egypt and the United Arab Emirates said that the agreement reached on Thursday will improve relations between the two allies, but they provided few other details.
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