Saudi Deposit Promotes Stability of Egypt’s Foreign Exchange Market

The Saudi move comes following the recent devaluation of the Egyptian pound. (Photo: AFP)
The Saudi move comes following the recent devaluation of the Egyptian pound. (Photo: AFP)
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Saudi Deposit Promotes Stability of Egypt’s Foreign Exchange Market

The Saudi move comes following the recent devaluation of the Egyptian pound. (Photo: AFP)
The Saudi move comes following the recent devaluation of the Egyptian pound. (Photo: AFP)

With Saudi Arabia’s announcement of a $5 billion deposit with the Central Bank of Egypt on Wednesday, sources told Asharq Al-Awsat that this move would enhance the stability of the foreign exchange market and consolidate the Egyptian economy amid severe pressure on the Egyptian pound.

In a statement published by the Saudi Press Agency (SPA), Riyadh said that the deposit comes as “an extension of the well-established historical ties and close bonds of cooperation between the Kingdom of Saudi Arabia and the sisterly Arab Republic of Egypt, and an affirmation of the depth of the deep-rooted relations.”

The SPA added that the Kingdom - in implementation of the directives of Custodian of the Two Holy Mosques King Salman bin Abdulaziz and Crown Prince Mohammed bin Salman - deposited $5 billion with the Central Bank of Egypt, confirming the distinguished bilateral ties at all levels.

Meanwhile, Egyptian Prime Minister Mostafa Madbouly held a meeting on Wednesday with Dr. Essam bin Saeed, Saudi Minister of State for Shura Council Affairs, and his accompanying delegation.

The Cabinet said in a statement that the governments of Egypt and Saudi Arabia had signed an agreement for the Saudi Public Investment Fund to invest in Egypt.

According to the statement, the agreement aims to encourage the Saudi PIF to invest in Egypt and contribute to achieving the country’s goals in attracting investments in foreign currencies. The total volume of trade exchange between Saudi Arabia and Egypt in 2020 exceeded about $5.5 billion, and rose to $7.5 billion this year.

Bin Saeed pointed to large investment opportunities that would be presented to the Egyptian market through Egypt’s sovereign fund or partnership with the private sector.

Observers told Asharq Al-Awsat that the Saudi move came following the recent devaluation of the Egyptian pound against the US dollar and other challenges, including fears of shortage and increasing prices of basic commodities, especially wheat and grain, as well as high oil prices that affect the state budget.



OPEC Again Cuts 2024, 2025 Oil Demand Growth Forecasts

The OPEC logo. Reuters
The OPEC logo. Reuters
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OPEC Again Cuts 2024, 2025 Oil Demand Growth Forecasts

The OPEC logo. Reuters
The OPEC logo. Reuters

OPEC cut its forecast for global oil demand growth this year and next on Tuesday, highlighting weakness in China, India and other regions, marking the producer group's fourth consecutive downward revision in the 2024 outlook.

The weaker outlook highlights the challenge facing OPEC+, which comprises the Organization of the Petroleum Exporting Countries and allies such as Russia, which earlier this month postponed a plan to start raising output in December against a backdrop of falling prices.

In a monthly report on Tuesday, OPEC said world oil demand would rise by 1.82 million barrels per day in 2024, down from growth of 1.93 million bpd forecast last month. Until August, OPEC had kept the outlook unchanged since its first forecast in July 2023.

In the report, OPEC also cut its 2025 global demand growth estimate to 1.54 million bpd from 1.64 million bpd, Reuters.

China accounted for the bulk of the 2024 downgrade. OPEC trimmed its Chinese growth forecast to 450,000 bpd from 580,000 bpd and said diesel use in September fell year-on-year for a seventh consecutive month.

"Diesel has been under pressure from a slowdown in construction amid weak manufacturing activity, combined with the ongoing deployment of LNG-fuelled trucks," OPEC said with reference to China.

Oil pared gains after the report was issued, with Brent crude trading below $73 a barrel.

Forecasts on the strength of demand growth in 2024 vary widely, partly due to differences over demand from China and the pace of the world's switch to cleaner fuels.

OPEC is still at the top of industry estimates and has a long way to go to match the International Energy Agency's far lower view.

The IEA, which represents industrialised countries, sees demand growth of 860,000 bpd in 2024. The agency is scheduled to update its figures on Thursday.

- OUTPUT RISES

OPEC+ has implemented a series of output cuts since late 2022 to support prices, most of which are in place until the end of 2025.

The group was to start unwinding the most recent layer of cuts of 2.2 million bpd from December but said on Nov. 3 it will delay the plan for a month, as weak demand and rising supply outside the group maintain downward pressure on the market.

OPEC's output is also rising, the report showed, with Libyan production rebounding after being cut by unrest. OPEC+ pumped 40.34 million bpd in October, up 215,000 bpd from September. Iraq cut output to 4.07 million bpd, closer to its 4 million bpd quota.

As well as Iraq, OPEC has named Russia and Kazakhstan as among the OPEC+ countries which pumped above quotas.

Russia's output edged up in October by 9,000 bpd to about 9.01 million bpd, OPEC said, slightly above its quota.