07-04-2025
Global tariff tensions impact Egypt's currency and stock exchange
Cairo – April 7, 2025: On Sunday, both the Egyptian pound (LE) and the Egyptian Exchange (EGX) experienced declines. The EGX30 index dropped by 3.3 percent, reflecting global market reactions to the US administration's economic policies.
By the end of the trading session, the dollar closed at LE 51.0564 for buying and LE 51.1944 for selling, up from LE 50.5296 and LE 50.6669 at the close of the previous week.
This shift in both local and global markets follows the implementation of a blanket 10 percent tariff by the Trump administration on all incoming goods, which came into effect on Saturday.
The prevailing uncertainty surrounding the US tariffs has led both foreign and local investors to adopt a "wait-and-see" approach, contributing to a slowdown in capital inflows into emerging markets.
More severe tariffs — up to 49 percent — are set to follow for 57 countries on April 9. Egypt was affected by the baseline 10 percent tariff, avoiding the harsher rates imposed on regional peers such as Syria (41 percent), Iraq (39 percent), and Libya (31 percent).
In the banking sector, the average exchange rate of the dollar also rose on Sunday, reflecting the changes seen in the Central bank of Egypt's official rate. By the end of the trading day, the average dollar rate stood at LE 51.0728 for buying and LE 51.1728 for selling, up from LE 50.5474 and LE 50.6474 at the close of the previous week.
The dollar began Sunday's trading with a notable jump across various banks. The National Bank of Egypt posted a rate of LE 51.11 for buying and LE 51.21 for selling. Other banks, such as Banque Misr and Bank of Alexandria, quoted slightly higher rates at LE 51.22 for buying and LE 51.32 for selling. The Commercial International Bank (CIB) listed the dollar at LE 51.18 for buying and LE 51.28 for selling.
At United Bank, the dollar was pegged at LE 51.25 for buying and LE 51.35 for selling, while the SAIB Bank posted rates of LE 51.16 for buying and LE 51.26 for selling. The Abu Dhabi Islamic Bank Egypt offered rates of LE 51.15 for buying and LE 51.25 for selling.
The full impact of the new US tariffs remains uncertain, with IMF Executive Director and former Finance Minister Mohamed Maait stating that it's too early to gauge the damage. However, early indicators suggest significant declines in global financial markets, falling oil prices, and a weakening of the USD against a basket of currencies, excluding the LE.
Maait also noted that inflation could rise, which could dampen expectations for interest rate cuts. This scenario may keep borrowing costs elevated for an extended period, increase the cost of goods, slow economic growth, and contribute to higher unemployment. He warned that global trade volumes could shrink by more than 1 percent, as uncertainty continues to mount and confidence in the current economic system falters.
Looking ahead, Maait suggested that the short- and medium-term economic outlook will heavily depend on how other countries respond to the trade war and how the US reacts to these responses. "We'll have to wait and see how things unfold in the coming days," he concluded.
