EGP extends gains, hits nine-month high against USD: The EGP continued strengthening against the greenback yesterday, reaching its highest level since October 2024. The USD was changing hands at EGP 48.85-48.95 at the National Bank of Egypt and Banque Misr and at EGP 48.83-48.93 at the CIB at the end of the banking day yesterday.

Foreign inflows fuel EGP rally: An improved FX inflow and a higher supply of USD liquidity are driving up the EGP recovery against the greenback, a senior banker told EnterpriseAM yesterday. “We are seeing weekly inflows of USD 1 to 1.2 bn into debt instruments,” the source said. This happens as interest rates rise and geopolitical tensions ease, luring foreign investors back into emerging and frontier markets, the banker added.

Tourism receipts are helping, too (we’re approaching the peak of the summer season as the Gulf descends on Sahel) as are remittances, helping make up for the elimination of Suez Canal receipts thanks to the Houthis’ campaign against shipping in the Red Sea. Remittances from Egyptians living abroad climbed 24.2% y-o-y to reach USD 3.4 bn in May, making it the fifteenth consecutive months of y-o-y remittance growth. Remittances sent between July 2024 and May 2025 rose 69.6% y-o-y to reach USD 32.8 bn, while the figure jumped 59% y-o-y in the period between January and May 2025 to hit USD 15.8 bn.

Bankers we surveyed expect the EGP to appreciate a bit more in the coming weeks, bolstered by strong inflows of hard currency.

REMEMBER- Suez Canal receipts fell 54.1% y-o-y to USD 2.6 bn during the first nine months of the last fiscal year, with net tonnage down 61.9% and vessel transits falling 44.8%.

Don’t expect a Suez Canal rebound anytime soon: The Houthis said yesterday that they would step-up attacks on shipping as part of their bid to put pressure on Israel to stop its war in Gaza.

There’s less demand for greenbacks on the interbank market, with transactions dropping to between USD 100-200 mn a day with most banks having healthy FX positions, a banker told us, noting that strong USD inflows are bolstering the EGP at a time when global trends suggest potential weakening of the greenback, the source noted.

Also helping the EGP: We’re buying fewer cars and cellphones. Measures put in place to curb demand for USD-intensive goods are keeping demand for the USD in check, the senior banker said. Some also expect the Madbouly government’s drive to bolster local manufacturing will start to pay off toward the end of the year, further curbing demand for imports and starting to push up export receipts.

Capital Economics doesn’t see a thumb on the scale: The EGP’s rise to its highest level since October last year “may raise some alarm, given previous heavy management of the currency. But we are less concerned,” Capital Economics’ Jason Tuvey wrote in a research note seen by EnterpriseAM. This is because the USD has already weakened against most major currencies, meaning that the EGP has actually remained fairly stable since the start of the year. “The real effective exchange rate has appreciated, but it remains close to the lows recorded over the past decade,” the research note read.

The trend began last week, driven by substantial USD-denominated inflow, two sources in the banking sector told us at the time. These inflows coincided with the beginning of the new fiscal year, a decline in debt obligations, and rising tax revenues. Moreover, sources also noted that easing geopolitical tension and attractive interest rates spurred unprecedented foreign inflows into short and medium-term debt instruments.

The EGP rebound points to a preemptive move from foreign investors in treasury bills and bonds, as they see how Egypt is committed to having its upcoming review of its USD 8 bn IMF loan program completed, Al Ahly Pharos’ Hany Genena previously told us. “They [foreign investors] are preemptively banking on a potential interest rate cut by the CBE during its upcoming meeting in August. A combined fifth and sixth review of our IMF loan program is expected to conclude in September or October, unlocking a USD 2.5 bn tranche.

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