Egypt's Foreign Exchange Reserves Management

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What is the primary purpose of accumulating foreign exchange reserves in Egypt?

To reduce dependence on foreign investment

To invest in foreign markets

To finance budget deficits

To support the currency during periods of volatility (correct)

Which of the following is a strategy to mitigate the impact of currency fluctuations?

Increasing imports

Reducing foreign investment

Fixing exchange rates

Diversifying trade relationships (correct)

What is the benefit of promoting exports in managing currency fluctuations?

Reducing foreign investment

Increasing dependence on imports

Fixing exchange rates

Earning foreign currency and reducing reliance on imports (correct)

What is the goal of import substitution in managing currency fluctuations?

Reducing dependence on imported goods by promoting domestic production Signup and view all the answers

What is the advantage of export-oriented industries in a depreciating currency environment?

They become more competitive Signup and view all the answers

What is the primary objective of trade diversification in managing currency fluctuations?

Providing a more balanced exposure to different currencies Signup and view all the answers

What is the likely impact of a depreciating currency on companies that heavily rely on imports?

Higher costs, leading to lower profits and decreased stock prices Signup and view all the answers

What can a weaker currency lead to in terms of trade balances?

An increase in exports and a decrease in imports Signup and view all the answers

What was the percentage increase in Egypt's merchandise exports in 2022 compared to 2021?

22.4% Signup and view all the answers

What can be attributed to the rise in Egypt's import value in the first half of 2023 compared to the same period in 2022?

A weakening EGP, making imports more expensive Signup and view all the answers

What was the percentage increase in tourist arrivals in Egypt in 2022 compared to 2021?

55.3% Signup and view all the answers

What can companies that export goods or services benefit from when a currency depreciates?

Increased demand, leading to increased revenues and profits Signup and view all the answers

What could be a contributing factor to the decline in net foreign direct investment inflows in Egypt?

Increased uncertainty caused by currency fluctuations Signup and view all the answers

What is one way the Central Bank of Egypt can intervene in the foreign exchange market?

By buying or selling Egyptian pounds Signup and view all the answers

What is a potential social impact of a devalued EGP?

More expensive essential goods for low-income households Signup and view all the answers

What is a strategy for managing currency fluctuations in Egypt?

Central Bank intervention Signup and view all the answers

What is a possible reason for the growth of tourism in Egypt?

Relaxed travel restrictions Signup and view all the answers

What is a challenge caused by currency fluctuations in Egypt?

Uncertainty for businesses and individuals Signup and view all the answers