Almost all of the deficit represented NFAs with banks.
NFAs, which represent banking system assets owed by non-residents minus liabilities, have helped the central bank to support Egypt's currency over the past two years.
However, under a $3 billion financial support package agreed with the International Monetary Fund in December, Egypt agreed not to use the bank NFAs to stabilise or guarantee the level of the exchange rate and to consult with the IMF on possible action if banks' NFAs decline by $2 billion over any three-month period. The rise in the NFA deficit in March was the third in as many months. NFAs fell to a negative 755.57 billion pounds from minus 704.23 billion at the end of February.
That equates to a March decline of $1.47 billion using end-of-month central bank exchange rates, Reuters calculations show. The NFA deficit rose by $1.3 billion in February and $1.7 billion in January.
The central bank let the pound's official price depreciate against the dollar by 0.87% in the first half of March to about 30.90 to the dollar, where it has since remained despite growing pressure to allow a devaluation. Street dealers this week were offering to buy dollars at 37 pounds. The IMF said in December that Egypt had been financing its current account deficit by drawing down net foreign assets at banks.
Egypt's NFAs had stood at a positive 248 billion pounds in September 2021, before the decline began. (Reporting by Patrick Werr; Editing by Susan Fenton)
