Mohammed Abdel Aal, a board member of the Gulf Egyptian Bank, stated that while there are exceptional global pressures, the change in the Egyptian pound’s exchange rate against the dollar confirms its true flexibility.
In an interview with ‘Al Arabiya Business,’ Abdel Aal added that what we are witnessing in the market confirms that the movement of the Egyptian pound is free and not controlled by the Central Bank of Egypt.
Abdel Aal further explained that there are international circumstances that are putting pressure on the Egyptian pound, as the world is experiencing geopolitical tensions that are reflected in all global stock markets, including Egypt.
He continued, “The pressures that the Egyptian pound has been experiencing lately are repercussions and reflections of what has happened in the world, in addition to the exit of some investors from Egyptian treasury bills.”
Abdel Aal said that Egypt does not rely on the exchange rate as a true measure of the movement of the national economy.
Fitch outlines two scenarios for Egyptian Pound
Fitch Solutions revealed its expectations for the US dollar exchange rate against the Egyptian pound during the current fiscal year 2024-2025, which ends on June 2025.
The institution explained that there are two scenarios for the exchange rate, one optimistic and the other pessimistic, according to the development path of escalating tensions in the region.
The optimistic scenario depends on rapid calm, such as a ceasefire in Gaza, a much needed positive shock for the Egyptian pound as it would pave the way for the return of gradual navigation in the Red Sea and improve tourism.
This would cause the pound to strengthen towards the range of its previous expectations between LE 46.50 and LE 48.50 per US dollar.
However, Fitch Solutions anticipates the current escalation between Israel and Hamas to be reflected in the weakness of the pound against the dollar to less than LE 49.50, perhaps reaching LE 55.00 per dollar in the short term.
According to the institution, “Outward investment portfolio flows would cause banks’ net foreign assets to return to negative, and foreign exchange reserves to decline.”
