Egypt’s currency plunges to historic low, billions in foreign funds exit

The Egyptian pound fell on Sunday to its lowest level on record, dropping for the first time below 52 pounds to the US dollar on official markets.

The sharp depreciation comes as foreign investors have stepped up their exit from Egypt’s local bond markets over the past week – one of the most volatile periods regional economies have seen in years.

As the war pitting the United States and Israel against Iran continues to escalate, bank screens in Cairo on Sunday showed the dollar buying at 52.15 Egyptian pounds and selling at 52.25 at major lenders, including Abu Dhabi Islamic Bank, Bank of Alexandria and Banque Misr.

That level marks a drop of around 4.3% in a single day, and the weakest official rate ever recorded for the Egyptian currency.

At the height of Egypt’s economic crisis in early 2024, the dollar was trading at about 70 pounds on the black market, as a severe shortage of foreign currency paralysed the economy.

However, that rate reflected activity on the parallel market rather than the official exchange rate at the time, which the state had fixed at 30 pounds to the dollar.

After the government unified the official and parallel rates under an IMF programme later in 2024, the official rate stabilised at around 50 pounds to the dollar.

There has been no official confirmation of the exact scale of foreign capital outflows. But substantial withdrawals have taken place since the conflict began a week ago, according to preliminary banking data and analysts quoted by The National.

Their estimates range from 2 to 5 billion US dollars, mostly drawn from Treasury bills and bonds that had attracted foreign investors seeking high real returns.