Egypt has reached a currency swap agreement with China valued at USD2.7bn, moving closer to meet the terms required to clinch a USD12bn loan accord with the International Monetary Fund (IMF). The agreement is being processed by the Chinese authorities, an Egyptian Central Bank official said Sunday, speaking on condition of anonymity. The official did not provide additional details on when the deal was reached, the terms or when the funds might arrive. There was no immediate comment from the People’s Bank of China. China has been Egypt’s top trading partner since 2013, with total trade increasing by almost 30% since then to USD10bn in 2015, according to data compiled by Bloomberg. Of that amount, USD9.1bn were Chinese goods flowing into Egypt.   Our commentary: The deal brings Egypt closer to raising the USD6bn funding package required by the IMF; other requirements include a move on the currency and a reduction in fuel subsides, according to IMF Managing Director Christine Lagarde. We also note the final deal is larger than the initial talks about only USD2bn in swaps. The latter allows the government to fund nearly a third of total imports from China; hence, tampering demand on foreign exchange, and in turn, aiding the Central Bank of Egypt throughout an expected transition of the EGP in the coming few weeks. The Chinese side is most likely to deploy the EGPs it will receive in the local fixed income market, given that Egyptian exports to China are cUSD1bn. To that end, the deal is most likely to be utilised post the EGP adjustment. (Bloomberg, Mohamed Abu Basha)