Bloomberg Intelligence: The Egyptian pound is likely to remain strong despite a significant decline in the interest

The Egyptian pound is expected to remain strong despite the reduction in the interest that has exceeded market expectations, and it is likely that the value of the currency will not be weakened thanks to the high real return and strong investment portfolio and the stability of continued revenue from financial transfers and tourism, according to ‘Bloomberg Intelligence’. Sergey Volopueev, a specialist in the follow -up of foreign exchange markets and interest in emerging markets in Europe, the Middle East and Africa, explained that the continuation of financial facilitation is possible if the pressure on inflation as a result of the support reform remains under control. The interest reduction on August 28 with 200 basis points – twice the market expectations – reflects the power of the pound and the decline in inflation in Egypt sharply, as it dropped to 13.9% in July from 16.8% in May. The Central Bank of Egypt indicated that demand pressure is still limited, with inflation expectations falling. Read more: The Egyptian central has lowered interest rates for the third time since the beginning of 2025. The real return supports the demand for local assets, even after this great reduction, the real rate of return in Egypt remains the highest in emerging markets, ensuring the ongoing demand for assets in the local currency. Despite the expectation that further price adjustments are associated with support, the actual high yield offers an area to make an extra reduction in the interest without damaging strict monetary policy. On the other hand, the government’s commitment to the International Monetary Fund to cancel fuel subsidies to individuals by the end of 2025 increased the petrol rates by 15% in April, and the coming weeks could be a similar increase. The recovery of external accounts despite the decline in the revenue of the Suez channel, the external accounts of Egypt were strengthened despite the sharp decline in the Suez channel turnover by about 0.5 billion per month since the late 2023, as the current account deficit dropped to $ 5% of the gross stupid product in the first quarter of the first quarter of 2024. $ 7 billion in 2025. A goal facing winds has reversed the transfers of Egyptians working abroad to 10.1% of GDP in the first quarter of 2025 compared to 4.9% a year ago, to the biggest positive contribution, while tourism income added 1.2 additional points. The financial and capitalist account surplus allows the rebuilding of reserves a major financial and capitalist account in Egypt, as the official flow and investment portfolio flow are compensated for a decline in foreign direct investment, which enabled the central bank to rebuild the reserves with $ 14 billion, as the end of 2023 can be the external balance of Egypt. In the management of the governments, which drops the rapid ring of the ring of the management in the management of management, which can redeem the rapid ring of the management in the management of management, which can reduce the rapid ring of the management in the management of the management, which has the quick interest in managing the management, which has the rapid interest in the management, which has the rapid interest in the management. pounds. The Egyptian pound has risen 2.2% against the dollar since the end of June to become the best performance currency in the region of Europe, the Middle East and Africa this term and one of the most powerful in the world. In March 2024, monetary policy institutions canceled the gap between the official price and the parallel market, while international reserves and net foreign assets of banks continued to rise. Read more: The price of the Egyptian pound drops to a record level after the sudden interest, the nominal yield of the pound increases, investors the nominal yield of the pound for a period of 12 months more than 17% in August, to replace the third to the ruble and the lira in the European region, the Middle East. It is still likely that significant reductions in interest rates will occur during the fourth quarter, although the surprises of the rise in inflation and possible delays in the exchange of funds from the International Monetary Fund and foreign exchange can slow down the rate of these cuts. Even if interest rates are reduced by 300 additional basis points in the fourth quarter, the return on the Egyptian pound will remain a double number, which is sufficient to maintain the investment portfolio, even with the slowdown of the momentum of direct foreign investment.