Good morning, wonderful people. We have an absolutely packed issue for you this morning in which the big story remains the impact on the EGP of the Trump administration’s tariff war.

The message from the Central Bank of Egypt is clear: The floating FX regime is here to stay and we won’t be burning reserves to defend the EGP. CBE Deputy Governor Ramy Aboul Naga made that clear here in Dubai in on-stage remarks to an audience of hundreds of global fund and portfolio managers at the EFG Hermes One on One.

A floating currency is a “shock absorber” for the economy, Aboul Naga correctly said — one that prevents the buildup of imbalances of the type that eventually lead to crash devaluations.

The overall sentiment here among fund and portfolio managers, analysts, and corporates: What we’re seeing now with the EGP is natural and — yes — healthy. We should be worried when the dynamics *don’t* make sense. Had the EGP not weakened in response to what’s going on, it would have been a sign we were heading back to the “bad old days” before last year’s devaluation.

What should we expect next? Sentiment here at the One on One is that we’re looking at a period of adjustment, after which 10% tariffs (like those Egypt, the UAE, Saudi, and other major Mideast economies now face) are the “new 0%.” Businesses adapt, and we all move on.

How long will that adjustment period last? That’s the wildcard. In a dozen conversations yesterday, the answers ranged from “a couple of weeks, at least” to “up to six months.” Regional and global markets recover from crises (the global financial crisis, Covid-19, the invasion of Ukraine) recover and move on much, much faster than they did a generation ago.

And nobody is talking about “lost IPOs” just yet. There’s optimism that anything postponed from the spring window will be back on deck for execution this fall.

How bad is all of this for Egypt? Probably not at all. Two things factor into that thinking, folks here say:

  • Carry-trade investors who left Egypt the past couple of days will do so with a good taste in their mouths. They made money. And when the current turmoil settles, they’ll remember they got their USD and got out smoothly — a big vote of confidence in Egypt and the CBE.
  • If 10% is the “new zero,” our export competitiveness just got better relative to lots of people, suggesting a medium-term inflow of FDI is even more likely.

Read on for the blow-by-blow on how it’s all shaking out and drop us a note by hitting “reply” to this email if you have questions you want to explore.

PSA-

WEATHER- It’s set to be a hot and dusty day in Cairo today, with a high of 35°C and a low of 17°C, according to our favorite weather app.

The summery weather is yet to reach Alexandria, with a high of 26°C, a low of 15°C, and a chance of light rain.

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WATCH THIS SPACE-

Chevron to kick off surveying seabed for Egypt-Cyprus gas link: Energy giant Chevron will start surveying operations for the east Mediterranean seabed the upcoming summer, in preparation for the has pipeline connecting the two countries, according to a statement from the Cypriot government.

REMEMBER- The Oil Ministry kicked off the Egypt Energy Show in February by signing twoagreements with Cyprus to liquify and re-export Cypriot natural gas, following months of talk about an energy corridor connecting the two nations. Egypt will start receiving 400 mn cubic feet per day (mcf/d) from Cyprus’ Cronos gas field starting mid-2027 and another 500 mcf\d of gas from the country’s Aphrodite field by 2030, according to unconfirmed reports last month.

RESERVES WATCH-

Net foreign reserves rose to USD 47.8 bn at the end of March 2025, marking a USD 363 mn increase from February, according to data from the Central Bank of Egypt (CBE). The increase was driven by a jump in gold reserves that helped offset dips in FX reserves and special drawing rights. The country’s net foreign reserves have now increased month on month for the last 31 consecutive months.

DATA POINT-

Egypt’s population growth dropped to historic low in 1Q 2025, coming in at 1.3%, down from 1.4% during the same period last year and 1.6% for the quarter in 2023, according to a statement from the Health Ministry. The decline in birth rate continues a downward trend that saw the country record fewer than two mn newborns in 2024 for the first time in 17 years, with the fertility rate falling to 2.41 per woman from 2.54 the year before, while remaining highly above the replacement rate of 2.1 per woman. As of yesterday noon, the country’s population stood at 107.5 mn.

THE BIG STORY ABROAD-

Tariffs — and the global market turmoil they have sparked — are still the dominant theme across global business pages, though we also have news of impending US-Iran nuclear talks getting attention.

Markets continued to reel yesterday from the uncertainty around tariffs, with the S&P 500 entering the bear market briefly as it fell 20% from its peak — though stocks later saw a seven-minute rally as rumors on social media of a potential 90-day pause on tariffs circulated. The story is everywhere in the global business press. (CNBC | Reuters | WSJ)

Trump threatened an additional 50% tariff on China after the country slapped a 34% retaliatory tariff on American imports, vowing to hike tariffs if they don’t backtrack on their countertariff by tomorrow midnight. The additional levy would bring total tariffs on Chinese imports to 120%. He also confirmed there would be no pause on tariffs, but said he would be open to negotiations with some countries. (FT | Bloomberg | Reuters)

AND- The European Commission is also considering a retaliatory tariff of 25% on a range of US goods.

*** It’s Going Green day — your weekly briefing of all things green in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: We check in on the NWFE initiative to take a look at what the state has accomplished under the initiative and what it sets out to accomplish in the medium term.

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