Egyptian Economist Predicts Dollar to Stabilize Around LE 52, Citing Global and Domestic Pressures

Economist Mohamed Fouad has indicated that the exchange rate of the US dollar in Egypt is expected to remain around the 52 Egyptian Pound (LE) mark in the near future. He expressed skepticism about the possibility of the rate falling below LE 50 in the short term, attributing this outlook to factors such as the outflow of foreign investments, increasing financing needs, and inherent structural imbalances within the Egyptian economy.

During an appearance on the MBC Masr program “al-Hekaya” (The Story) with host Amr Adib, Fouad elaborated that the current appreciation of the dollar is part of a broader global trend. He identified three main drivers for this global strength: the economic conditions within the United States, pressures in energy markets, and structural issues affecting the Egyptian economy.

Fouad highlighted that the immediate catalyst for the dollar's rise in Egypt is the imbalance between capital outflows and inflows, noting that approximately US$1.8 billion exited the market within a single four-day period the previous week. He further explained that a flexible exchange rate system amplifies the market's sensitivity to these capital movements.

Addressing the global rise of the dollar, Fouad pointed to the robust performance of the US economy, supported by a strong labor market and high consumer spending. This is compounded by energy-related risks and substantial financing demands that are drawing liquidity from global markets. He specifically mentioned the US budget deficit and the anticipated issuance of around $2.2 trillion in new debt by the US Treasury as significant sources of financing demand. Additionally, projections suggest that new offerings in the technology sector could reach approximately $1.7 trillion by 2027, further increasing the attractiveness of the US market for capital.

Fouad stressed that these pressures are not unique to Egypt, affecting other emerging markets as well. He cited Argentina's severe financing difficulties, with bond yields nearing 12 percent, Indonesia's potential exclusion from emerging market indices, and a warning issued to Turkey as examples.

Regarding domestic factors, Fouad detailed that the outflow of dollars from Egypt is primarily driven by two types of foreign investment activity: investors divesting from treasury bills and the maturity of three-month deals initiated in July, which allow investors to repatriate their funds. He reiterated that a flexible exchange rate regime causes these movements to be directly reflected in the dollar's value, especially when outflows surpass inflows.

Furthermore, Fouad noted that global financing pressures are converging with structural imbalances within the Egyptian economy, as indicated by balance-of-payments figures. The trade deficit is estimated at around $65 billion, and the current account deficit stands at approximately $2.25 billion. He concluded that this combination of global financial pressures and domestic economic weaknesses makes the Egyptian economy more susceptible to fluctuations in international markets and capital flows.

While ruling out a catastrophic scenario, Fouad emphasized the persistent and evident pressures facing the Egyptian economy, aligning with broader trends in emerging markets. Consequently, he anticipates the dollar exchange rate will likely fluctuate around the LE 52 level for the foreseeable future, deeming a return below LE 50 in the near term improbable.

On the subject of the national plan post-IMF program, Fouad explained that discussions are still in the preliminary stages of defining broad outlines. The plan is open for public debate until the end of December, but it has not yet reached a fully detailed stage. He also mentioned his involvement in a session on public debt and foreign currency resource management at the Egypt 2026 Forum.