Euro Weakens Across Egyptian Banks as Economic Outlook Remains Resilient

Taarek Refaat

The euro recorded a broad decline against the Egyptian pound at the close of trading on Sunday, reflecting a largely weaker performance across Egypt’s banking sector, while the U.S. dollar traded within a narrow range amid improving economic indicators and a stable macroeconomic outlook.

The movement in foreign exchange markets came as international institutions highlighted the growing resilience of Egypt’s economy, supported by exchange-rate flexibility, easing inflationary pressures, and improving fiscal metrics.

According to a recent assessment by Fitch Ratings, Egypt’s flexible exchange-rate regime has played a critical role in absorbing the impact of foreign capital outflows, helping to strengthen policy credibility and mitigate the effects of regional geopolitical tensions linked to the conflict involving Iran, the United States, and Israel. Fitch maintained Egypt’s sovereign credit rating at 'B' with a Stable Outlook.

Meanwhile, the Institute of International Finance (IIF) projected a gradual improvement in Egypt’s public finances over the coming years. Government debt is expected to decline to 82% of GDP in fiscal year 2026/27, down from 85.3% in 2025/26 and 86.8% in 2024/25, compared with 90.9% in 2023/24.

The institute also forecast a narrowing budget deficit to 4.9% of GDP in 2026/27, compared with 6.1% in the previous fiscal year. Egypt’s primary surplus is expected to strengthen to 5.3% of GDP, up from 4% in 2025/26.

Despite expectations of continued economic progress, the IIF anticipates a modest slowdown in growth. Egypt’s real GDP is projected to expand by 3.5% in fiscal year 2026/27, compared with 4.1% expected in 2025/26 and 4.4% in 2024/25. Nevertheless, the forecast remains significantly above the 2.4% growth rate recorded in 2023/24.