The central banks of the UAE and Egypt have agreed to a currency swap deal, which might help the faltering Egyptian economy. The deal allows the two central banks to exchange up to five billion Emirati dirhams and 42 billion Egyptian pounds, or around $1.36 billion.
The Egyptian pound has lost more than half its value versus the dollar in the previous 18 months, and the nation is in need of foreign money. Egypt, the most populated country in the Middle East, is the world's largest grain importer. Its supplies have typically come from Eastern Europe, therefore the effect from the Ukraine war has been severe.
Last month, Egypt’s annual inflation rate stood at 39.7 percent, more than double compared with the same month last year, when it recorded 15.3 percent. Currency swap arrangements are usually deployed when nations are seeking to shore up central and domestic banks by providing them with extra liquidity in the form of a foreign currency, as per aljazeera.
“It seems again that the UAE is providing Egypt with financial support,” James Swanston, an economist specialising in the Middle East and North Africa, added. “Egypt’s central bank needs more ammunition to prop up its currency.”
Since President Abdel Fattah el-Sisi's election in 2013, the UAE and other Gulf governments have been staunch supporters of his administration. Later, more than $100 billion in Gulf funds has been sent to Cairo via Central Bank deposits, fuel aid, and other means.