In a recent report, the agency said the Egyptian pound has weakened by around 10% against the US dollar since late February, following the exit of more than $10 billion in foreign investments, without intervention from the Central Bank of Egypt to support the currency.
Fitch Ratings said Egypt’s exchange rate flexibility has played a key role in containing the impact of foreign portfolio outflows and regional geopolitical tensions, helping maintain Egypt’s sovereign rating at B with a stable outlook.
In a recent report, the agency said the Egyptian pound has weakened by around 10% against the US dollar since late February, following the exit of more than $10 billion in foreign investments, without intervention from the Central Bank of Egypt to support the currency.
Fitch noted that this approach helped preserve Egypt’s foreign exchange reserves at $53 billion by the end of April, while maintaining stability in the foreign exchange market and avoiding any gap between the official and parallel market rates.
The net foreign assets of the Central Bank of Egypt and the banking sector declined to $22 billion, but remained above their level at the time of Egypt’s last sovereign rating upgrade in November 2024.
Fitch expects reserves to decline to $50 billion by the end of FY2026/2027, assuming the Strait of Hormuz reopens by July.
The agency warned that a prolonged war could put further pressure on Egypt’s external finances and inflation, mainly through higher energy import costs.
Despite regional risks, Fitch highlighted the strength of remittances from Egyptians abroad, which rose 30% to $22 billion during the first half of the current fiscal year.
The agency also expects Gulf support for Egypt to continue, whether through foreign direct investments or deposits.
