China and Egypt expand currency swap to 30 billion yuan

China and Egypt have expanded their local-currency swap line to 30 billion yuan (approximately $4.47 billion USD), a 67 percent increase from the previous 18 billion yuan limit. The agreement, finalized by the People’s Bank of China and the Central Bank of Egypt, extends the financial backstop for three years.

During a state visit to Cairo, Chinese President Xi Jinping and Egyptian President Abdel Fattah el-Sisi advocated for the increased use of their respective national currencies to support industrial, energy, and digital infrastructure projects. The cooperation aims to position Egypt as a regional logistics and industrial hub, leveraging Chinese technology transfers and investment, particularly as Egypt integrates into the expanded BRICS bloc.

While the expanded mechanism provides an alternative source of foreign-currency liquidity, analysts note that its immediate utility may primarily support the financing of Chinese imports due to Egypt’s significant trade deficit with Beijing. The success of the initiative will depend on whether financial institutions and businesses regularly adopt the yuan for cross-border settlements.