Dollar slides EGP 1.30 this week as investors bet on regional stability

The exchange rate for the US dollar continued to decline on Thursday, with the selling price at the National Bank of Egypt reaching 51.87 Egyptian pounds. This marks a decrease of 1.30 pounds over the week.

Abdel Hamid Emam, chief economist at Pioneers Securities, told Al Manassa that the pound’s appreciation stems from a cooling of regional tensions, which has lowered the risk profile for Egyptian debt and attracted fresh foreign capital. “If foreign investor inflows continue at the same pace, the dollar is expected to drop to the 50-pound level and may even fall below that,” Emam said.

Foreign net purchases of treasury bills on the Egyptian Exchange totaled 53.6 billion pounds (over $1 billion) in Thursday's trading alone.This reflects a strong buying trend in local debt instruments this week, coinciding with ongoing US-Iranian negotiations to end the war that began last February.

Emam estimates that the government debt market has seen investment inflows of approximately $2.8 billion since the start of this week, which has increased the foreign currency supply and supported the pound.

The pound had depreciated against the dollar since the start of the conflict as approximately $8 billion in “hot money” exited the Egyptian debt market, according to estimates by Moody’s, pushing the rate to unprecedented levels above 54 pounds.

However, Emam warned that a return to geopolitical escalation could lead to a swift reversal of this trend, with foreign investments exiting once again, potentially driving the dollar back up against the pound.