The EGP rallied against the greenback yesterday, snapping a four-day slide as one USD changed hands for around 51.33 at both public and private banks. The rate stood at EGP 51.47 to the USD the day before, its lowest point since the March 2024 float after US President Donald Trump kicked off his trade war. (The EGP started the week at EGP 50.62.)

The Central Bank of Egypt’s determination to stick to a floating FX regime appears to be paying off: Bankers we spoke with yesterday tell us that a handful of foreign portfolio investors cautiously bought back into Egyptian debt. Debt markets saw outflows starting Sunday after the scope of the Trump tariff war became clear — as some investors opted to lock in gains and move to cash or other less-risky assets in a time of uncertainty. The pace of outflows slowed significantly yesterday, two bankers said, and the interbank market remains healthy.

We figured this could happen, saying in yesterday’s issue that carry-trade investors who left Egypt this week were doing 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.”

What’s bringing them back? The returns here are too lucrative to turn down, with Egypt offering one of the best yields on debt globally, the bankers noted.

Volumes on the interbank market are returning to more normal levels, down 70% from Sunday’s peak at USD 250-300 mn.

SMART POLICY- Egyptian policymakers are on the ground at the EFG Hermes One on One in Dubai sending the right signals. Finance Minister Ahmed Kouchouk met throughout the day yesterday with investors. On Monday, Central Bank of Egypt Deputy Governor Ramy Aboul Naga was crystal clear, telling investors that a floating FX regime is a “shock absorber” for the economy from which the CBE has no intention of backing away. This type of policy maturity is incredibly welcome.

Tags: