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.”
Last Monday witnessed an outflow of indirect foreign investment from treasury bills amid fears of escalating tensions in the region between Israel and Iran.
Prime Minister Mostafa Madbouly said in a previous press conference that August 5 witnessed a small outflow of foreign investment for about seven percent of the total, and the outflow was financed without affecting foreign exchange reserves, which led to flexibility in the exchange rate.
Egypt attracted about $22 billion during the first two months of the liberalization of the exchange rate in March and April, bringing the total portfolio to $35.4 billion for the first time in its history, according to data issued by the Central Bank of Egypt.
