Ahmed Shawky Cautions Against "Gold Market Dollar," Citing Foreign Reserves as Economic Buffer.

Amid rapidly accelerating global economic volatility and escalating geopolitical tensions casting shadows over energy markets and supply chains, the Egyptian economy stands at a critical crossroads that demands deep analytical vision and prudent economic policies. In this context, Dr. Ahmed Shawky, a banking expert, offers a comprehensive reading of the current economic landscape, emphasizing that the present phase is characterized by “uncertainty,” which necessitates adopting flexible strategies at both the state and individual levels.

Dr. Shawky explains that the Egyptian government’s recent decision to raise fuel prices was not arbitrary, but rather a logical response to the rise in global Brent crude prices, which exceeded the benchmark set in the state’s general budget (USD 75 per barrel). The primary objective of this measure is to alleviate pressure on the public budget, ensuring the continued targeting of subsidies toward those most in need through social protection programs such as Takaful and Karama.

The banking expert further clarifies that this decision comes within the framework of addressing what he describes as “imported inflation,” noting that the current price increases are mainly driven by external factors, particularly the rising cost of imported goods, rather than purely domestic causes.

Estimates indicate that every 10% increase in fuel prices leads to an approximate 1% rise in the overall inflation rate, with expectations that inflation could reach around 15% in the near term.

Regarding monetary policy and the future of interest rates, Dr. Shawky believes that the most likely scenario for the upcoming Monetary Policy Committee meeting is to maintain current rates in the short term.

He attributes this to several factors, most notably the need to monitor market developments and wait for greater clarity regarding the duration of ongoing regional and global conflicts. He also stresses the importance of utilizing the exchange rate as a primary line of defense to manage hot money flows and control the pace of non-resident capital outflows, rather than relying solely on interest rate hikes, which could increase the burden of public debt.

Dr. Shawky reassures that Egypt’s foreign exchange reserves have reached safe levels exceeding USD 52 billion, providing the central bank with sufficient room to maneuver and cover the country’s strategic needs for up to seven months.

On the level of individual investment strategies during such crises, Dr. Shawky offers practical advice to preserve purchasing power, warning against emotional decision-making or following rumors. Regarding gold, he recommends buying in intervals to average purchase prices, considering it a safe haven over the long term, though it does not generate periodic income.

As for investment funds, he describes them as “the best option at present,” given their risk diversification, professional management, and ability to generate compounded returns, particularly money market funds. In real estate, he suggests cash purchases of resale units to benefit from substantial discounts or installment-based purchases from developers. Meanwhile, bank certificates are suitable for those seeking a fixed periodic income, although they lack flexibility for early withdrawal within the first six months.

The banking expert also criticizes certain emerging market practices, such as the so-called “gold market dollar” or “car dollar,” describing them as unhealthy phenomena that create price distortions and harm the overall economy.

He further emphasizes the need to activate the supervisory role of the Ministry of Labor to ensure the enforcement of the minimum wage in the private sector, which would help citizens cope with successive waves of rising prices.

Dr. Ahmed Shawky concludes that the Egyptian economy is entering a phase of “hold” or cautious waiting. While the state adopts austerity measures to rationalize energy consumption and reduce the deficit, individual investment awareness remains the key safeguard against the potential consequences of stagflation.

He underscores the importance of diversifying financial portfolios and avoiding the concentration of savings in a single investment vehicle to ensure greater financial stability during this critical period.