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China expands currency swap with Egypt as trade ties reach new heights
By Jevans Nyabiage
South China Morning Post, Hong Kong
Saturday, September 5, 2026
Egypt's expanded currency swap with China may help bring the yuan into wider use in trade and investment, but experts say any reduced reliance on the US dollar will not happen in a hurry.
Chinese President Xi Jinping and his Egyptian counterpart Abdel-Fattah el-Sisi this week backed greater use of their currencies, while linking closer financial ties to plans for new factories, energy projects and digital infrastructure.
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A joint statement released on Wednesday during Xi's state visit to Cairo also envisions building Egypt up as a regional industrial and logistics hub, leveraging Chinese technology transfers and investment to anchor Cairo's role within the expanded Brics emerging economies bloc as a gateway for regional and global markets. However, analysts said whether genuine domestic capacity would increase depended on Egypt's negotiation of the terms.
Cairo already has a 30 billion yuan (US$4.47 billion) swap arrangement with Beijing and has borrowed through a panda bond issued in China's domestic market. Whether Egyptian and Chinese companies use the yuan regularly will be the main test of the currency push.
The People's Bank of China and the Central Bank of Egypt renewed the swap in June, extending it for three years and increasing its value from 18 billion yuan, also known as the renminbi.
In their statement, Xi and el-Sisi "welcomed the renewal of the local currency swap agreement and the expansion of its scale," and encouraged Chinese and Egyptian financial institutions to support industrial and development investment, infrastructure and green and digital projects.
John Calabrese, a non-resident senior fellow at the Washington-based Middle East Institute, said "the reference to yuan use is probably significant."
It signaled "an effort to deepen financial ties, reduce reliance on the dollar and advance the international use of the renminbi, mirroring what China is doing with other partners," he said.
Egypt has faced recurring foreign currency shortages in recent years, although dollar availability has improved. Settling some trade in yuan could reduce the demand for dollars, but it will not resolve the country's broader foreign currency needs, according to observers.
Lauren Johnston, a China-Africa specialist and senior research fellow at the AustChina Institute, described the expansion as a gradual step and more "a continuation than a revolution," saying the swap was small compared with China's arrangements with parties such as Indonesia or the European Central Bank.
"The key question is whether it is actually drawn down and used," she said.
Yun Sun, a senior fellow and director of the China programme at the Stimson Centre, also said the yuan's internationalisation would not happen in a single breakthrough.
"There is no determining moment but each step counts," Sun said. "By creating more currency-swap partnerships, the renminbi is gradually extending its reach. It still faces significant headwinds, which makes the incremental approach even more important."
The yuan push extends beyond Egypt, with African governments using or considering currency swaps, yuan-denominated borrowing and conversions of dollar debt into renminbi, including in Kenya, Ethiopia, Mozambique, and Zambia.
Chinese customs data shows that Egypt imported nearly US$20 billion of goods from China in 2025 but exported only about US$819 million back.
Under the swap, each central bank can provide the other with its currency up to an agreed limit. Egyptian banks and companies could therefore obtain yuan for transactions with China without first buying US dollars.
Egypt raised 3.5 billion yuan in 2023 through Africa's first sovereign sustainable panda bond, according to the African Development Bank.
The currency push also has an existing industrial base. By mid-2026, the China-Egypt TEDA Suez Economic and Trade Cooperation Zone had attracted more than 200 companies and more than US$4.7 billion in investment.
El-Sisi announced this week that the zone would enter a third expansion phase, with new factories and projects able to create more opportunities to use yuan and Egyptian pounds for investment, equipment and supplier payments.
The leaders also outlined the hub ambition for "industry, logistics, clean energy and the digital economy connecting Asia, Africa and Europe." Proposed areas include electric vehicles, shipbuilding, renewable energy, desalination, agriculture, data centres, semiconductors, cybersecurity, aerospace, and key mineral supply chains.
"Egypt is one of the potential winners from the reorganisation of global supply chains," Johnston said. "It is close to Europe and the Middle East and also offers access to African markets.
"This could become one of China's more advanced industrial clusters in Africa, supported by Egypt's proximity to major markets, its Brics membership and its links to sub-Saharan Africa."
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