Egyptian economist rules out US dollar falling below LE 50

Economist Mohamed Fouad has suggested that the US dollar exchange rate in Egypt is likely to remain around the LE 52 mark for now. He believes it is unlikely that the rate will fall below LE 50 in the near future, citing factors such as outflows of foreign investments, rising financing requirements, and structural imbalances within the Egyptian economy.

Fouad made these comments during a phone-in with "al-Hekaya" (The Story) on MBC Masr. He explained that the dollar's rise is happening alongside a global trend of US currency strength, and is influenced by three main factors: economic conditions in the US, pressures within energy markets, and structural issues in the Egyptian economy.

The immediate cause for the dollar's rise in Egypt is capital outflows exceeding inflows, with approximately US$1.8 billion leaving the country in just four days. Fouad also pointed out that a flexible exchange rate regime makes the market more sensitive to capital inflows and outflows. The US economy is currently strong, driven by a robust labor market and high consumer spending, which is supporting the dollar's rise.

Additionally, there is significant liquidity being drawn from markets due to the US budget deficit and new debt issuance. Fouad also mentioned that other emerging markets, such as Argentina and Turkey, are facing similar financial strains. Regarding domestic factors, the outflow of dollars from the Egyptian market is mainly driven by investors selling off their treasury bill holdings, as well as the maturity of three-month deals concluded in July.

Fouad noted that a flexible exchange rate regime allows these movements to directly affect the dollar exchange rate. He also highlighted that global pressures, such as structural imbalances within the Egyptian economy, make the country vulnerable to fluctuations in international markets and capital flows. Despite these challenges, Fouad does not foresee a catastrophic situation, but suggests that the Egyptian economy is facing clear and persistent pressures as part of a broader trend affecting emerging markets.

The Egyptian government is currently in the process of defining the broad outlines of its plan following the IMF program, with public debate expected to continue until the end of next December. Fouad also participated in a session on public debt and foreign currency resource management as part of the Egypt 2026 Forum.