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Egypt’s foreign reserves drop to $37 bln with Ukraine war shock

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Egypt’s net foreign reserves fell sharply to $37.082 billion in March from $40.994 billion in February, the central bank said on Thursday, noting that it had moved to cover high foreign investor outflows triggered by Russia’s invasion of Ukraine.

Egypt’s economy came under sharp pressure as investors exited emerging markets following the invasion. Egypt is a major importer of wheat from Russia and Ukraine, and both countries are important to Egypt’s tourism sector.

“In the wake of the Russia/Ukraine crisis and in line with the CBE’s mandate to maintain price stability, the CBE decided to temporarily mobilize its excess foreign currency reserves to calm the markets,” a statement from the central bank said.

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“Such mobilization was aimed at covering substantial foreign investor outflows and partially covering local demand in order to ensure the availability of imported strategic goods and to repay external debt obligations in a timely manner.”

Egypt allowed its currency to devalue sharply in late March, and Gulf Arab states are channeling up to $22 billion to Egypt in investments and deposits.

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