Gold value listed in FX re­serves growth curbs re­serves de­cline in De­cem­ber 2018

FX re­serves gold value in­creased by $104m, for­eign cur­ren­cies down by $2.068bn

The Daily News Egypt - - News - By Hos­sam Mounir

The in­crease in the value of gold listed in the for­eign ex­change (FX) re­serves at the Cen­tral Bank of Egypt (CBE) curbed the fall in the value of to­tal re­serves dur­ing De­cem­ber 2018.

On Mon­day, the CBE dis­closed that its FX re­serves had de­clined by about $1.963bn at the end of De­cem­ber 2018 to $42.551bn against $44.514bn in Novem­ber.

Ac­cord­ing to data ob­tained by Daily News Egypt, for­eign cur­ren­cies listed on the re­serves de­clined by $2.068bn in De­cem­ber to $39.242bn from $41.31bn in Novem­ber.

On the other hand, the value of the gold as­sets in­cluded in the re­serves rose dur­ing De­cem­ber by $104m to $2.716bn against $2.612bn in Novem­ber.

Spe­cial draw­ing rights (SDRs) reached $586m in De­cem­ber, grow­ing from $580m in Novem­ber.

SDRs are an in­ter­na­tional re­serve as­set de­vel­oped by the In­ter­na­tional Mone­tary Fund (IMF) in 1969 to com­ple­ment the of­fi­cial re­serves of mem­ber coun­tries.

The value of the SDRs is de­ter­mined by a bas­ket of five ma­jor cur­ren­cies, namely the US Dol­lar, the Euro, the Ja­pane­seYen,the Bri­tish Pound,as well as the Chi­nese Yuan which has been in­cluded in the bas­ket of cur­ren­cies as of 1 Oc­to­ber 2016.

The value of Loans to IMF reached $11m down from $14m in Novem­ber.

The de­cline in FX re­serves is the first since the ex­change rate was lib­er­alised in 2011.

De­spite this de­cline, re­serve bal­ances are still at one of the high­est lev­els recorded by the CBE, cov­er­ing about eight months of im­ports of ba­sic com­modi­ties, which is higher than the global min­i­mum of three months.

While the CBE did not men­tion the rea­sons for the large drop in re­serves, a se­nior of­fi­cial at the bank said in a press state­ment on Mon­day that the de­cline was due to the bank pay­ing the trea­sury bills to for­eign in­vestors and the in­ter­est of for­eign debts.

He added that the CBE has also used part of its re­serves to pay ex­ter­nal li­a­bil­i­ties owed by min­istries and gov­ern­ment agen­cies.

An­a­lysts pre­dicted that the value of the fifth tranche of the IMF loan worth $2bn will ar­rive this month, which would also boost FX re­serves again by the end of Jan­uary.

The CBE had ended the mech­a­nism of trans­fer­ring funds of for­eign in­vestors in local se­cu­ri­ties start­ing from 4 De­cem­ber 2018, which in­cluded new trea­sury bills (T-Bills) and bonds, as well as shares only listed on the Egyp­tian ex­change, while in­vest­ment now can move in and out through the in­ter­bank mar­ket.

On Sun­day, the CBE sold one-year dol­lar-de­nom­i­nated T-Bills, due on 7 Jan­uary 2020, worth $854.1m bear­ing an av­er­age in­ter­est rate of 3.797%.

The value of the gold as­sets in­cluded in the re­serves rose dur­ing De­cem­ber by $104m to $2.716bn against $2.612bn in Novem­ber

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