RIYADH: Financial trade between the UAE and Egypt is expected to surge after the monetary authorities of the two nations signed a currency swap agreement.
The countries’ respective central banks formalized an arrangement between the UAE dirham and the Egyptian pound, according to a press statement.
The deal, signed by Central Bank of the UAE Gov. Khaled Mohamed Balama and his Egyptian counterpart Gov. Hassan Abdullah, allows for the exchange of local currencies between the two institutions with a nominal size of up to 5 billion dirhams ($1.36 billion) and 42 billion Egyptian pounds.
A currency swap agreement is a legally binding contract between two parties that outlines the terms and conditions under which they will exchange currencies and make periodic interest payments.
Commenting on the agreement, Balama expressed that it reflects the strong relationship between the countries and provides an opportunity to promote cooperation while developing their respective economic and financial markets.
“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 cooperation with the CBE (Central Bank of Egypt) to achieve common interests, positively impact the trade, investment, and financial sectors, and enhance financial stability,” Balama added.
Furthermore, Abdullah noted that the move was in support of the “continued robust relations” between the UAE and Egypt.
He added he was confident the move will “bolster cooperation between both financial sectors in their respective currencies.”
A day before signing the deal, Abdullah met with his Chinese counterpart Pan Gongsheng in Beijing, where the two heads discussed various topics intending to enhance economic and financial cooperation between the countries.
A currency swap agreement was among the most prominent subjects examined, intending to improve the partnership between nations.
The discussions also included the Egyptian government’s plan to issue panda bonds denominated in Chinese yuan.
Additionally, the officials encouraged Chinese and Egyptian banks to establish a presence in each other’s county to enhance financial integration between economies.
Source: Arab News