The Central Bank of the UAE and the Central Bank of Egypt have signed a bilateral currency swap agreement to boost economic ties between the countries.
The size of the agreement is between Dh5 billion ($1.36 billion) and 42 billion Egyptian pounds, the UAE bank said on Thursday.
A foreign currency swap is an agreement to exchange currency between two parties, in which they swap principal and interest payments on a loan made in one currency for a loan of equal value in another currency.
The agreement “reflects the strong relationship between the two countries and serves as an opportunity to promote co-operation and develop our respective economic and financial markets”, said UAE central bank governor Khaled Balama.
“In line with the efforts of the UAE and Egypt’s leadership to collaborate more broadly across multiple areas, the CBUAE is keen to deepen its co-operation with the CBE to achieve common interests, positively impact the trade, investment and financial sectors, and enhance financial stability,” said Mr Balama.
The UAE and Egypt, the Arab world’s most populous country, have a strong trade and economic relationship.
The UAE is the largest international investor in Egypt, with total investments worth more than Dh55 billion, according to a Wam report last year.
Over the past 22 years, UAE-Egypt non-oil trade has totalled more than Dh247.68 billion, rising by 3,635 per cent since 2000, the state news agency reported, citing data by the Federal Competitiveness and Statistics Centre.
In May 2022, the two countries, along with Jordan, announced the signing of the industrial partnership agreement aimed at boosting sustainable growth as well as the creation of a $10 billion investment fund to accelerate partnership across five priority sectors.
These include petrochemicals; metals, minerals and downstream products; textiles; pharmaceuticals; and agriculture, food and fertilisers.
A number of UAE companies are also investing in Egypt including Emaar Properties and Aldar Properties, Abu Dhabi’s biggest listed developer.
“I am confident (the agreement) will bolster co-operation between both financial sectors in their respective currencies,” Hassan Abdalla, governor of Egypt's central bank, said.
Last year, the UAE central bank signed a similar agreement with its Turkish counterpart to help improve trade and investment ties.