FX Rate in Egypt Projected to Average EGP 49.5/$1 in 2024: BMISource: www.export-egypt.com 8/12/2024, Location: Africa |
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BMI, a research firm associated with Fitch Solutions, forecasts a depreciation of the Egyptian pound against the US dollar throughout the remainder of 2024.
The company projected the foreign exchange (FX) rate to average EGP 49.5/$1 if geopolitical tensions continue to escalate, marking an increase from the company’s previous prediction of EGP 47/$1 by the end of 2024. BMI’s report noted that a ceasefire in Gaza would allow navigation in the Red Sea to return to normal and boost tourism activity, which would lead to a rise in the value of the Egyptian pound, making the exchange rate around EGP 47.5/$1. It is worth noting that, due to rising tensions in the Red Sea, Egypt’s revenues from the Suez Canal declined from $9.4 billion in FY2022/2023 to $7.2 billion during FY2023/2024, a 23.4 percent decrease. The report highlighted that the Israeli attacks on both Beirut and Tehran have increased the risk of a broader war in the Middle East and North Africa region to its highest level since October 2023, causing the value of the Egyptian pound to decrease by around two percent. BMI also speculated that the war in Gaza, the increasing unrest in the Red Sea, and the war with Hezbollah on the Israeli-Lebanese border will continue until the second half of 2024. This will expose the region to a sharp escalation, raising concerns among investors regarding its repercussions on Egypt. This comes against the backdrop of the new cabinet’s plan announced last month, which aims to increase the annual growth rate of foreign direct investments to about 14 percent by 2030 as per the State Ownership Policy Document. Last week, the US dollar reached its highest level against the Egyptian pound since 7 March, only a day after Egypt’s last EGP devaluation decision. The exchange rate on the Central Bank of Egypt’s (CBE) official website reached EGP 49.20/$1 for buying vs. EGP 49.30/$1 for selling. |
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