Egypt.. The pound is facing pressure amid regional tensions and fluctuations in foreign investment flows.. What are the experts’ comments?

Cairo, Egypt - The Egyptian pound is facing pressure against the US dollar in light of geopolitical tensions in the region, movements of foreign investments in government debt instruments, and increased demand for hard currency to meet import needs, amid anticipation of the impact of these factors on the exchange rate during the coming period. The exchange market witnessed mixed movements in recent days, as the dollar rose against the pound and approached the level of 55 pounds in Tuesday’s transactions, before it declined at the end of Wednesday’s transactions. The dollar also recorded in the Central Bank of Egypt 54.32 pounds for purchase and 54.46 pounds for sale at the end of Wednesday’s transactions, down from 54.44 pounds to buy and 54.58 pounds for sale at the close of Tuesday’s transactions, a decline of 12 piasters in the buying and selling prices.

Reasons: Former Vice President of Blom Bank, Tariq Metwally, said that geopolitical tensions and the fears they raise among foreign investors, in addition to the increased demand for the dollar with the approaching month of Ramadan, are among the factors that may push the price of the American currency to rise against the pound. He added that hot money investments in Egypt amount to about $55 billion, which makes the movements of these investments an influential factor in the exchange market, explaining that the exit of part of them may lead to an increase in demand for the dollar, especially if it is not matched by a similar increase in the supply of foreign currency.

The sources of foreign exchange in Egypt vary between remittances from Egyptians working abroad, revenues from tourism, exports, the Suez Canal, and foreign investments, in addition to other sources. The development of these flows, compared to the economy’s needs for hard currency, affects the market’s ability to meet the demand for the dollar. Central Bank data showed an increase in remittances from workers abroad during the period from January to August 2026 by 27.2 percent on an annual basis, to reach about $33.9 billion, compared to $26.6 billion during the same period of the previous year. Remittances during August 2026 also increased by 21.7 percent, to reach about $4.2 billion, compared to $3.5 billion in August 2025.

Metwally said, in exclusive statements to Ofek News in Arabic, that the exchange market has become significantly affected by the movements of foreign investors, buying and selling government debt instruments, indicating that the exit of some investments may put pressure on dollar liquidity and increase demand for the American currency. Likewise, increasing demand for the dollar while the supply does not increase at the same rate leads to an increase in its price. Inflation data showed a decline in the annual rate of consumer prices in cities to 13.9 percent in September, compared to 14.5 percent in August, according to the Central Agency for Public Mobilization and Statistics. In contrast, monthly inflation rose to 1.3 percent, compared to 0.1 percent in August, while it reached 1.8 percent in September 2025.

The annual core inflation rate, which is measured by the Central Bank, also fell to 14.1 percent in September, compared to 14.9 percent in August, while the monthly rate rose to 0.8 percent, compared to 0.3 percent in the previous month. Metwally said that the exchange rate is one of the most prominent factors affecting inflation in Egypt, given the economy’s need for foreign currency to finance imports, adding that the decline in some foreign exchange resources, including Suez Canal revenues, may increase pressure on the exchange market and raise concerns about the availability of the dollar.

He pointed out that regular provision of foreign currency to meet import needs represents an important factor in limiting the transmission of exchange rate pressures to commodity prices, warning that the dollar exceeding the level of 55 pounds may impose additional pressure on the economy and local prices. Regarding expectations, Metwally suggested that the level of 55 pounds to the dollar would represent a point of resistance under the current circumstances, with the possibility of the US currency falling to the levels of 54 and 53 pounds if the situation stabilizes and no new developments occur.

He added that exceeding the level of 55 pounds and stability above it may raise greater concerns among market participants, but he stressed that the path of the exchange rate remains linked to geopolitical and economic developments and the movement of foreign investments. Import cost: For his part, the Executive Director of Money and Fixed Income Markets at Al Ahly Financial Investments Company, Mahmoud Najla, said that determining the direction of the dollar price requires looking at a group of factors, including geopolitical developments, the movement of foreign investments, and the volume of demand for hard currency to meet import needs.

Najla added that the exit of a portion of foreign investments in government debt instruments may increase demand for the dollar and put pressure on the pound, especially if there are not sufficient foreign cash flows to compensate for these movements, noting that regional tensions may affect investors’ decisions and capital flows, in conjunction with the local market’s need for the dollar to finance imports and fulfill foreign obligations. Najla explained, in exclusive statements to Ofoq News in Arabic, that increasing the supply of foreign exchange may help relieve pressure on the pound, while the continued high demand for the dollar without a sufficient supply may push its price to rise.

In a related context, Central Bank data showed an increase in net international reserves to about $57.35 billion at the end of September 2026, compared to about $57.2 billion at the end of August. Najla said that the rise in the cost of foreign currency may increase the cost of importing goods and production requirements, which may affect local prices depending on the extent of the various sectors’ dependence on imported components, adding that the regularity of foreign exchange flows and the availability of the dollar to finance import needs are important factors in reducing pressures on prices, while the continued decline of the pound may increase the burdens on companies and consumers.