Gulf remittances anchor the EGP against market pressures

The EGP posted gains for the second day running, strengthened by a fresh wave of inflows from Egyptian expats in the Gulf, driven by regional security concerns.

As things stand: The greenback was changing hands at EGP 51.92-52.02 at state-owned banks yesterday, down from EGP 51.94-52.04 a day earlier.

Behind the numbers: Despite foreign investors pulling out of the market — they exited a net USD 1.13 bn in local T-bills yesterday compared to USD 1.17 bn on Tuesday — the market found a strong safety net in the remittances sent in from the GCC, bankers told EnterpriseAM. Egyptians working in the Gulf are sending money home at an increased rate due to concerns over regional security and tensions in the Gulf states, we’re told. Regional escalations have cost us USD 6 bn in outflows so far.

Beyond remittances, the recent disbursement from the IMF injected vital funds into the economy. Together, these cash inflows have successfully supported the foreign exchange market's supply-and-demand mechanism, cooling down interbank activity and stabilizing the currency, another bank told us.