Egyptian Pound Hits Highest Level against Dollar in 2025
The Egyptian pound (EGP) has climbed to its highest level against the U.S. dollar since November 2024, sparking speculation about whether the rally will continue, possibly pushing the currency higher versus dollar.
Currently trading near EGP 49 per dollar, the pound has recovered from levels above EGP 51 just weeks ago. The currency's recent strength is attributed to a mix of global capital movements and increased investor confidence in Egypt's economy.
The pound's appreciation is partially a result of broader global economic trends. As investors move capital away from the U.S. dollar toward emerging markets and certain developed economies such as those in Europe, currencies like the Egyptian pound are seeing upward pressure.
This reallocation has led to greater inflows into Egyptian treasury bills and instruments such as Currency Investment Products (CIP), contributing to the pound's strengthening.
Domestically, several structural improvements are helping support the currency. The return of both direct and portfolio foreign investments has played a critical role in boosting confidence in Egypt's macroeconomic outlook.
Recent U.S. policies, including tariff escalations and mounting political pressure on the Federal Reserve to cut interest rates, have encouraged investors to look beyond American markets. Egypt has emerged as a beneficiary of this shift, attracting notable investments from China and Turkey in recent months.
Additional support is expected from continued engagement with the International Monetary Fund (IMF). The Egyptian government has confirmed that reviews four through six of its $8 billion loan program will be completed by September and October, which could unlock further disbursements.
So far, Egypt has received $3.5 billion under the program. At the same time, discussions are underway with Kuwait to convert $4 billion in deposits held by Egypt's central bank into direct investments, a move widely seen as a strategic shift in bilateral economic relations.
In parallel, Qatar is preparing to invest in Egypt's tourism sector, particularly in North Coast and New Alamein projects, while Saudi Arabia is boosting investments in infrastructure and energy development.
Despite ongoing disruptions in the Red Sea, early signs of recovery in Suez Canal traffic are contributing to a more stable foreign exchange environment. Although canal revenues fell by 54% year-on-year during the first nine months of 2025, recent crossings by large vessels are viewed as a positive signal.
At the same time, tourism and remittances from Egyptians abroad are providing critical foreign currency inflows. Improved security and logistical conditions in key tourist destinations are also aiding recovery in these sectors.
Annual inflation dropped to 14% by the end of June, coinciding with the pound's strengthening trend. Lower inflation has enhanced Egypt's attractiveness to foreign investors, especially those interested in high-yield government debt instruments.
The result has been the return of short-term capital, often referred to as 'hot money,' as investors seek to capitalize on Egypt's relatively high interest rates before any potential rate cuts by the Central Bank of Egypt (CBE) in the fourth quarter.
Analysts estimate that the Egyptian pound remains undervalued by approximately 10%, even after its recent gains. While some international institutions have suggested the pound may be undervalued by as much as 30–40%, a more conservative view places its fair value at around EGP 44.5–45 per dollar.
This perceived undervaluation offers upside potential for foreign investors, reducing concerns about exit risks and further strengthening Egypt's external debt profile.
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