Egypt and China discuss a currency swap agreement and the issuance of Panda bonds

The Governor of the Central Bank of Egypt, Hassan Abdullah, and his Chinese counterpart, Pan Gongsheng, discussed the currency swap agreement to enhance the partnership between the two sides and contribute to financial stability.

According to a statement by the Central Bank of Egypt, today, Wednesday, September 27, 2023, the Chinese Central Bank Governor designated his Egyptian counterpart to deliver a speech at the celebration of the Chinese National Day and the Mid-Autumn celebrations, in the presence of senior representatives of international institutions.

Currency swap and issuance of Panda bonds between Egypt and China

Earlier, the two banks signed a bilateral agreement worth 18 billion yuan for a 3-year currency swap.

The two sides held a bilateral meeting in which they discussed many topics within the framework of enhancing economic and financial cooperation between the two countries, in light of the directives of the political leadership in the two countries to advance cooperation in this field and the recent meeting of the two presidents last December.

Among the most prominent topics discussed in the meeting was the Egyptian government’s intention to issue panda bonds denominated in the Chinese yuan, and the two parties also encouraged Chinese banks to be present in Egypt and vice versa, to enhance financial integration between the two economies.

Entry of the yuan into the basket of international currencies

On the other hand, Vice President of the Egyptian Society for Finance and Investment Studies, Mohsen Adel, said that the entry of the yuan into the basket of international currencies provides the opportunity to increase Chinese investments in Egypt after concluding a currency swap agreement, pointing out the need to take into account that the volume of Chinese products present in the Egyptian market is large now. Compare it with the size of any other imported products.

He expected that the decision would contribute to increasing the rates of Chinese tourism attraction to Egypt, but on the condition that there are more effective mechanisms on the Egyptian side to benefit from the decision, anticipating an increase in the volume of commercial transactions between the two countries during the coming period.

According to data from the International Trade Point of the Ministry of Trade and Industry and statistics from the Chinese Embassy in Cairo, the volume of trade exchange between Egypt and China amounted to about 12.25 billion dollars during the recent period.

Volume of Chinese imports

According to the latest statistics published at the beginning of this year, the volume of Chinese imports to Egypt amounted to about $9.8 billion, without adding exports for the eight months in 2016.

The volume of Egyptian exports to China represents about 9% of the volume of trade exchange between the two countries.

The value of Chinese investments in Egypt exceeded six billion dollars, with more than 80 Chinese companies currently operating in the Egyptian market.

The economic expert, Dr. Emad Kamal, said that the agreement indicates that the government is working on the file of enhancing investments and foreign trade, especially since China is one of the major countries that the majority of Egyptian importers deal with, and therefore the agreement enhances the opportunities of Egyptian investors, and at the same time encourages Chinese investors. To enter the Egyptian market.

He explained that the agreement would also support the Egyptian foreign exchange reserve, as the Chinese yuan has been adopted in trade exchanges with China, and therefore there is no need for the dollar in transactions between the Egyptian investor and Chinese companies.