Remittances up, dollar down: EGP finds support amid uncertain global outlook - Economy

Al-Ahram Weekly

4 days ago

The Egyptian pound has continued to strengthen modestly against the US dollar, with the official exchange rate falling below EGP 49 for the first time since late October 2024, nearly nine months ago.
As of Monday, the Central Bank of Egypt (CBE) listed the dollar at EGP 48.6 for buying and EGP 48.7 for selling, down from EGP 49.0 and EGP 49.1, respectively, at the close of trading last Thursday.
Every month, the dollar has depreciated against the pound by roughly 1.7 percent. Year-on-year, however, it remains up by around 0.7 percent, according to Ahram Online calculations based on the greenback rate from a range of public and private banks.
'The recent appreciation of the Egyptian pound against the US dollar signals a modest rebalancing in the foreign exchange market,' banking expert Hani Abou El-Fotouh told Ahram Online. 'This has been driven by local improvements, including a narrowing of the gap between official and parallel market rates, increased access to foreign currency through formal channels, and stronger FX inflows from debt instruments and anticipated investments.'
Abou El-Fotouh noted that remittance flows have shown a mild recovery, while import controls remain disciplined, helping to reduce pressure on foreign currency demand.
Remittances from Egyptians abroad have maintained the sharp rise recorded between July 2024 and May 2025, reaching $32.8 billion — a 69.6 per cent increase year-on-year — according to the latest figures from the CBE.
'However, in my view, this trend is fragile unless supported by deeper structural reforms, particularly those that boost exports and expand domestic production capacity. On the global level, the dollar remains resilient, supported by robust US data and expectations of prolonged high interest rates. Relying solely on short-term inflows or administrative measures is unsustainable. Achieving genuine currency stability requires addressing underlying economic imbalances, especially in the context of a tightening global monetary environment,' he warned.
A recent report by US investment bank Goldman Sachs echoed that caution, suggesting that the Egyptian pound remains undervalued by around 30 percent relative to its fair value. The bank said there is room for further appreciation, particularly if portfolio inflows continue and key monetary indicators improve.
The report highlighted that the pound has held steady since its devaluation in March 2024, with the convergence of official and parallel market rates signalling growing investor confidence in Egypt's exchange rate policy, despite ongoing geopolitical challenges in the region.
Goldman Sachs also pointed to anchored expectations and low volatility, with the official exchange rate fluctuating within a narrow band since the beginning of the year. On the fundamentals front, it cited a rebound in Egypt's foreign reserves and a reversal in the banking sector's net foreign asset position, which swung from a $17.6 billion deficit at the start of 2023 to a $4.8 billion surplus by May 2025.
Meanwhile, an International Monetary Fund (IMF) mission is scheduled to visit Egypt in September to conduct the fifth and sixth reviews of the country's $8 billion Extended Fund Facility (EFF) loan programme. Both reviews are expected to be completed by December.
The mission will also begin discussions for the first review of Egypt's $1.3 billion Resilience and Sustainability Facility (RSF) loan programme, which is likewise expected to conclude before the end of the year. Completion of all three reviews would make Egypt eligible to receive a combined disbursement of over $2.4 billion.
Follow us on:
Facebook
Instagram
Whatsapp
Short link: