Egypt's Pound Holds Firm as Dollar, Euro Ease

The Egyptian pound remained broadly stable against major foreign currencies on Thursday, while the U.S. dollar and euro edged lower at several banks, underscoring the resilience of Egypt's foreign exchange market despite growing regional geopolitical tensions.

The U.S. dollar weakened slightly against the Egyptian pound at the close of trading Thursday.

At both the National Bank of Egypt and Banque Misr, the dollar was quoted at EGP 51.77 for buying and EGP 51.87 for selling.

The euro recorded declines across several Egyptian banks.

At the Arab African International Bank, the euro traded at EGP 60.03 for buying and EGP 60.40 for selling, levels that were also recorded at the National Bank of Egypt.

The latest currency performance suggests that Egypt's foreign exchange market remains relatively stable despite heightened regional uncertainty, supported by strong reserves, improving policy credibility, and continued flexibility in the exchange rate regime.

The latest currency movements come as Fitch Ratings highlighted the pivotal role of Egypt's flexible exchange rate regime in cushioning the economy from external shocks, including capital outflows and escalating tensions involving Iran, the United States, and Israel.

According to the agency, exchange rate flexibility has strengthened confidence in Egypt's economic policy framework and helped contain pressure on the country's sovereign credit profile, which Fitch maintained at "B" with a Stable Outlook.

Fitch reported that Egypt's net foreign assets at the central bank and banking sector declined by approximately $7 billion during the two months ending April 1, reaching around $22 billion. Nearly $2 billion of that decline was attributed to lower gold prices.

Despite the reduction, the agency noted that Egypt's international reserves remained stable at approximately $53 billion at the end of April, while domestic dollar liquidity continued to be comfortable.

The report also pointed to the absence of any significant gap between the official exchange rate and parallel market rates, suggesting that foreign exchange market conditions remain relatively stable.

Fitch warned that the primary risk stemming from the ongoing Iran-U.S.-Israel conflict relates to Egypt's external position, particularly if disruptions in regional trade and energy markets persist.

Under its baseline scenario, which assumes the reopening of the Strait of Hormuz by July, Fitch expects Egypt's gross foreign reserves to ease to around $50 billion by the end of fiscal year 2027. Even at that level, reserves would cover roughly four months of current external payments, broadly in line with the average for sovereigns rated in the "B" category.