The Egyptian pound depreciated to a record low on Sunday, falling below 52 pounds per US dollar on official markets for the first time. The currency weakened to a buying rate of 52.15 pounds and a selling rate of 52.25 pounds at major lenders, including Abu Dhabi Islamic Bank, Bank of Alexandria and Banque Misr. This represents a single-day decline of approximately 4.3%, marking the weakest official exchange rate ever recorded for the Egyptian currency.
The depreciation follows a significant withdrawal of foreign capital from Egypt’s local bond markets over the past week. Preliminary banking data and analyst estimates, reported by The National, indicate outflows ranging from $2 billion to $5 billion. The exodus is largely attributed to escalating geopolitical tensions in the Middle East, specifically the conflict involving the United States, Israel, and Iran, which has heightened risk aversion among international investors. These investors had previously been attracted to Egyptian Treasury bills and bonds by high real interest returns.
This recent slide contrasts with the acute currency crisis of early 2024, when a severe foreign currency shortage saw the dollar trade at about 70 pounds on the black market while the official rate was state-maintained at 30 pounds. The government subsequently unified the official and parallel exchange rates under an International Monetary Fund (IMF) programme later that year, stabilising the official rate around 50 pounds per dollar.
The current episode underscores the persistent vulnerability of Egypt’s economy to external shocks and capital flow volatility. Despite the IMF-supported rate unification, the economy remains sensitive to regional instability and shifts in foreign investor sentiment. The central bank has not officially confirmed the scale of recent outflows or commented on the record low rate. The renewed pressure tests the durability of the IMF programme’s reforms and highlights Egypt’s ongoing challenge in building sustainable foreign exchange reserves. Market watchers anticipate continued scrutiny of the currency’s trajectory as geopolitical developments unfold.
