Egypt Seeks to Revolutionize Trade with BRICS Through Local Currency Initiatives

Egypt is poised to take a significant step in reshaping its economic landscape by promoting the use of local currencies in bilateral trade with BRICS countries. This strategic move aims to reduce the country's reliance on the U.S. dollar and foster greater financial independence. As the 2024 BRICS summit approaches in Kazan, Russia, Egypt is set to spearhead discussions on this transformative initiative.

Unlocking New Avenues for Growth and Collaboration

Embracing the BRICS Expansion

The upcoming BRICS summit in Kazan, Russia, holds immense significance for Egypt, as it marks the first gathering since the group's expansion in January 2023. With the addition of Iran, Ethiopia, Saudi Arabia, and the United Arab Emirates, the BRICS bloc has grown to encompass a diverse range of economies, each with its unique strengths and aspirations. Egypt's inclusion in this esteemed group presents a unique opportunity to leverage its strategic position and forge new partnerships that can drive economic prosperity.

Reducing Dependence on the U.S. Dollar

One of Egypt's primary objectives as a BRICS member is to support the group's collective drive for de-dollarization. The country's business community has welcomed this initiative, recognizing the challenges posed by the lack of access to U.S. dollars in trade. By promoting the use of local currencies, Egypt aims to ease the process of conducting business with its BRICS counterparts, opening up new avenues for growth and collaboration.

Strengthening Currency Swap Agreements

To facilitate this transition, Egypt has already taken proactive steps, including the signing of currency swap agreements with key BRICS nations. The central banks of China and Egypt, for instance, have signed a deal totaling 18 billion yuan (approximately $2.57 billion), paving the way for increased trade and investment ties. Similar agreements with other BRICS members further solidify Egypt's commitment to this transformative initiative.

Diversifying Reserves and Reducing Dollar Dependence

In a strategic move to reduce its reliance on the U.S. dollar, Egypt has also emerged as the top global buyer of gold in 2022. By replacing dollars with gold in its reserves, the country is laying the groundwork for a more diversified and resilient financial system, better equipped to withstand the volatility of global markets.

Fostering Trade and Investment Ties

The shift towards local currency-based trade with BRICS members is expected to have a significant impact on Egypt's overall trade dynamics. Currently, trade with BRICS countries accounts for approximately one-third of Egypt's total trade, amounting to over $31 billion. By leveraging currency swap agreements and promoting the use of local currencies, Egypt aims to further strengthen these trade and investment ties, paving the way for a more prosperous and self-reliant economic future.

A Long-Term Strategy for De-Dollarization

Egypt's initiatives with BRICS are not merely short-term solutions but rather the first steps in a long-term strategy to gradually reduce the dominance of the U.S. dollar in its trade transactions worldwide. This ambitious plan reflects the country's determination to assert its financial independence and chart a course that aligns with its own economic priorities and the collective interests of the BRICS bloc.As the world's economic landscape continues to evolve, Egypt's proactive approach to promoting the use of local currencies in trade with BRICS countries stands as a testament to its strategic vision and its commitment to shaping a more equitable and resilient global financial system.