Ahmed Kamel – Egypt Daily News
The Egyptian pound posted its strongest weekly performance in August as renewed foreign investment in government securities, stronger dollar inflows and softer import demand combined to ease pressure on the currency.
The pound gained about 1.3% against the US dollar during the week, marking its first weekly advance since the start of the month. The move came after a period of weakness in which concerns over foreign-currency availability and changing investor sentiment had weighed on the exchange rate.
By the close of trading, the average interbank rate stood at around 50.16 pounds per dollar for buying transactions and 50.26 pounds for selling transactions, according to central bank data. The currency advanced by roughly 67 piastres during the week.
Trading activity in the interbank market also increased significantly. Bankers said transactions totaled approximately $950 million across Wednesday and Thursday, with a portion of the demand coming from overseas investors returning to Egyptian Treasury bills.
The renewed activity suggests that foreign investors are becoming more comfortable with Egypt’s local debt market. High domestic interest rates have made short-term government securities attractive, particularly as exchange-rate conditions have shown signs of stabilizing.
A shift in foreign investor sentiment
Mohamed Abu Basha, head of macroeconomic analysis at EFG Hermes, said recent market indicators pointed to a return of net foreign portfolio inflows into Egypt. Some estimates placed the newly recorded inflows at less than $500 million, although the overall amount could be higher because not all transactions have been disclosed.
Foreign holdings of Egyptian government debt are now estimated at close to $40 billion, according to Abu Basha. That would bring them near the levels seen before the outbreak of the Iran-related conflict, when international investors reduced exposure to emerging markets amid heightened geopolitical uncertainty.
Figures from the International Monetary Fund show that non-resident holdings of Egypt’s domestic government debt rose to $37.2 billion at the end of June 2026. That compared with $36.04 billion at the end of March. The total had fallen from almost $39 billion in February as the conflict triggered a pullback from Egyptian assets.
The recovery in holdings indicates that some foreign investors have begun rebuilding positions in Egyptian debt. Their return has been encouraged by the yields available on Treasury bills, as well as by improved confidence that the pound can remain relatively stable over the short term.
Reduced demand for dollars
The currency also benefited from a decline in demand for dollars from companies seeking to pay for imports. Bankers said import-related demand had eased in recent days, reducing the need for banks and businesses to compete for limited foreign-currency liquidity.
At the same time, Egypt has seen improvements in several sources of dollar income. Remittances from Egyptians working overseas reached $47.3 billion during the 2025–2026 financial year, an increase of nearly 30% compared with the previous year. The figure represents the highest annual level on record.
Remittances are a crucial source of foreign exchange for Egypt. Alongside tourism, Suez Canal receipts and exports, they provide the dollars needed to pay for imports, service foreign debt and support the banking system.
M ahmoud Nagla, executive director of money markets and fixed income at Al Ahly Financial Investments, said stronger foreign-currency inflows were being supported by the recovery in tourism revenues and the continued rise in remittances. The improvement, he said, had helped increase the availability of dollars in the domestic market.
Greater liquidity has reduced some of the pressure that had built up around the pound. When demand for dollars rises faster than supply, companies and financial institutions often seek to secure foreign currency quickly, putting downward pressure on the local currency. The recent increase in supply has helped narrow that imbalance.
Yields remain a key attraction
Egypt’s high interest rates remain the main incentive for overseas investors considering local debt. The nominal yield on six-month Treasury bills is approximately 26%. After accounting for the 15% withholding tax, the net return is estimated at around 22%, according to Morgan Stanley calculations.
The investment bank has advised foreign investors to maintain exposure to six-month Egyptian Treasury bills. Its assessment is that the return is high enough to compensate investors for the risk that exchange-rate movements could reduce the value of their gains when converted back into foreign currency.
The calculation is particularly important for international funds. A high yield can be offset by a sharp fall in the pound, meaning investors must assess both the interest income and the potential currency loss. Recent stability in the exchange rate has therefore added to the appeal of short-term Egyptian securities.
The pound’s performance in the coming weeks will depend on whether these favorable trends continue. Sustained foreign purchases of government debt, strong remittance inflows and an ongoing recovery in tourism could provide further support. Lower import demand would also help preserve dollar liquidity.
However, the currency remains sensitive to changes in global investor sentiment and regional developments. A renewed increase in geopolitical risk could prompt foreign funds to reduce their positions in emerging-market debt. For now, stronger foreign-currency inflows and renewed demand for Egyptian Treasury bills have given the pound a temporary boost and eased pressure in the interbank market.
