After a prolonged period of currency fluctuations and fiscal challenges, Egypt’s economy is beginning to show tentative signs of stabilization—led by a modest strengthening of the exchange rate. In early August 2025, the Egyptian pound appreciated to EGP 48.40–48.50 per US dollar, according to Central Bank of Egypt (CBE) data, marking its strongest level in over a year. Unlike previous rebounds driven largely by short-term inflows or policy moves, the recent uptick may reflect gradual improvements in Egypt’s approach to economic and foreign exchange management.
Exports, tourism, and remittances take the lead
Improved trade dynamics have been central to the recovery. Kareem Abdel-Rahman, Head of Global Transaction Banking at a multinational bank in Egypt, noted that “non-oil exports surged to $24.5 billion in the first half of 2025, up 22% year-on-year, while imports rose by just 3.4%, helping to narrow the trade deficit.”
Tourism revenues also reached new heights. “Tourism revenues hit a record $14.4 billion in FY 2023/2024,” he said, crediting tighter integration of proceeds into the formal banking system. However, the most dramatic driver has been remittances, which increased by 69.6% to $32.8 billion from July to May of FY 2024/2025, up from $19.4 billion in the same period a year earlier. Between January and May 2025 alone, inflows climbed 59% year-on-year to $15.8 billion, with May setting a record at $3.4 billion.
According to Abdel-Rahman, these gains reflect “growing trust in Egypt’s formal financial system” and position remittances as one of the country’s most reliable sources of foreign currency. Government reforms—tying export subsidies to repatriation of proceeds and tightening oversight of FX inflows—have closed gaps exploited by the parallel market, reinforcing official channels and investor confidence.
Policy and rates in focus
The CBE held deposit and lending rates at 24% and 25% in July, following significant hikes over the past two years in line with IMF recommendations to curb inflation and attract inflows. “These high rates helped bring back ‘hot money’ into Egypt’s domestic debt market, supporting reserves temporarily,” Abdel-Rahman said. Still, he warned that such borrowing costs can suppress private sector growth and even fuel inflation.
He cautioned that “global commodity price volatility continues to strain Egypt’s balance of payments, while regional geopolitical risks pose threats to trade, tourism, and investor sentiment.” Still, he remains cautiously optimistic that, with current momentum, the pound could stay stable or strengthen modestly in the near term—provided market confidence remains the key driver.
A structural realignment
For Ayman Ismail Abuhend, Chief Investment Officer at Significa Ventures, the pound’s recent gains are no temporary bounce. “The drop in the USD/EGP exchange rate—from 51 to 48 pounds over the past three months—is far from superficial. It reflects gradual improvement in Egypt’s underlying financial and monetary fundamentals,” he said.
He highlighted four indicators: foreign reserves rising from $34.4 billion in July 2023 to $48.14 billion by April 2025; remittances increasing sharply after the adoption of a flexible exchange rate; inflation falling from 38% in September 2023 to 14.9% in June 2025; and a fundamental shift in monetary policy toward a managed float. “With inflation falling meaningfully… real interest rates are now positive, further strengthening the pound’s appeal,” he noted, while warning that reliance on non-structural FX sources leaves the economy vulnerable to external shocks.
Black market crackdown, mega projects
Ahmed Moaty, CEO of VI Markets Egypt, described the currency’s performance as “an overall success for the Egyptian state.” He credited regulatory enforcement, citing “intensive law enforcement campaigns against the black market,” alongside momentum from large-scale initiatives such as the Ras El-Hekma project.
He pointed to all indicators trending upward—exports, reserves, tourism earnings hitting a record $20 billion, and strong remittances—as signs of sustained strength. Looking ahead, Moaty believes the USD/EGP rate could reach EGP 48 within weeks if current trends continue.
Momentum with caution
The pound appreciated 2.5% in July, breaking from the EGP 49–50/USD range that had held since the March 2024 float. Ali Metwally, Economist and Economic & Business Advisor at IBIS Consultancy in the UK, attributed the move to renewed inflows into treasury bills and bonds, boosted by a Goldman Sachs report citing undervaluation. He said the recovery is underpinned by stronger investor confidence, a steep drop in inflation, and GDP growth of 4.0% this fiscal year, with 4.6% expected next year.
For the first time in years, Egypt’s currency appears to be trading on fundamentals rather than short-term sentiment. However, sustaining this trajectory will depend on diversifying FX sources, deepening reforms, and navigating a still uncertain global environment.
