The EGP dipped against the USD during trading yesterday, setting a new post-float low as the greenback changed hands for EGP 51.72-51.75 at both public and private banks. Yesterday’s dip offset a brief rebound in the value of the EGP the day before, which saw it close at EGP 51.33 to the USD. The EGP started the week at 50.62.

Will Trump tariff relief announced overnight put some wind back in the EGP’s sails? Egypt was included in the surprise 90-day pause of additional tariffs announced on Truth Social. The region’s markets and currencies are yet to respond due to the announcement happening between trading sessions, but US markets shot up on the news with the S&P 500 up 9.5%, the Nasdaq rising 12.2%, and the Dow coming in +7.9% at the end of the session.

Why did the EGP dip yesterday? You can blame a risk-off rooted in US-China tensions, bankers tell us. Foreign investors in Egyptian debt headed for the exits on Sunday and Monday. Others dipped their toes back into the market on Tuesday, and some yesterday were spooked as Washington and Beijing exchanged heated words and tough tariffs.

Volumes in the interbank market were up 84% yesterday to USD 955 mn, one banker told us. That brings total interbank trading to mor than USD 3 bn since the trade war escalated late last week.

The takeaway from bankers we spoke with yesterday: Expect the EGP to continue to seesaw. The EGP is being buffeted by global sentiment: “We cannot predict [when the volatility might subside,” one banker told us. “It’s all tied up in global developments.”

Remember: Volatility is good right now. Not comfortable, but good — that the CBE is committed to a floating FX rate that serves as a “shock-absorber for the economy,” as CBE Deputy Governor Ramy Aboul Naga put it this week,

Don’t be put off by volatility in forwards, either: Non-deliverable forwards (NDFs) yesterday suggested that some traders see the exchange rate weakening to as low as EGP 61.50 per USD this year, according to Asharq Business. NDFs are a snapshot of sentiment at a single time. Capital Economics previously penciled-in the EGP easing to 55 against the greenback by the end of this year, Goldman Sachs predicted saw it at something closer to EGP 59 against the USD by the end of 2025.

Expect the Madbouly government to stick to its guns when it comes to the reform program. “What Egypt is currently doing and what officials are signalling indicates that the government is committed to its reform plans — this is evident from the movements in the exchange rate over the past few days,” economist Mona Bedair told us. Staying the course on the FX rate shows the country’s “seriousness towards maintaining the fundamentals of its market, which helps maintain the confidence of investors,” Bedair said.

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