The EGP inched up again against the greenback yesterday, shrugging off the USD’s attempts to regain ground last Wednesday and Thursday, a period marked by a noticeable slowdown in inflows. The USD was changing hands at EGP 48.60-48.70 at the National Bank of Egypt, EGP 48.62-48.72 at Banque Misr, and at EGP 48.59-48.69 at CIB by the end of yesterday’s trading.

USD-denominated inflows remain the key driver of the exchange rate stability, a senior banker told EnterpriseAM. You can thank two factors: continued foreign appetite for government debt and a substantial rise in tourism revenues.

Foreign investments in public debt saw a robust recovery, with holdings surpassing USD 38 bn at the end of June, according to our source — a comfortable return to form. Foreign holdings of Egyptian government paper stood at USD 41.3 bn at the end of December 2024, but took back-to-back hits: first as global markets reacted to Trump’s “liberation day” tariff offensive and then in a regional risk-off as Israel and the United States bombed Iran.

Still, investors in Egyptian debt are asking a lot: Bidders asked for yields of up to 31% at Thursday’s t-bill auction, according to CBE data. One banker we spoke with said the elevated bids have been “mainly driven by the exceptional global economic conditions.”

The Finance Ministry was having none of it: It accepted relatively few bids on Thursday

Every sustained EGP 1 decrease in the EGP-USD exchange rate could reduce our external debt by EGP 94 bn annually, a Finance Ministry official tells us. A stronger EGP is good for our external debt position — and the bns we’re spending this year on debt service. The ministry aims to reduce external public debt by USD 1-2 bn annually.

The EGP has been strengthening against the greenback for nearly two weeks now, driven by substantial USD-denominated inflows. These inflows coincided with the beginning of the new fiscal year, a decline in debt obligations, and rising tax revenues.

The rebound aligns closely with expectations at Goldman Sachs: The global investment bank recently predicted that the EGP spot rate should be supported by strong portfolio inflows and strong international reserves, giving us a buffer to handle turbulence.

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