USD/EGP forward rate hits new all-time high at EGP 54.26

Forward rates of a currency indicate its value in a future contract. This means that the EGP is expected to reach EGP 54.26 a year from now.

The current official USD/EGP rate stands at around EGP 31 in the official market and around EGP 60 in the parallel market.

The forward rate of the pound hit EGP 50.5 in December. It surpassed EGP 40 for the first time in March.

British bank HSBC projected the Egyptian pound to reach EGP 40-45 against the US dollar during the first quarter of 2024, according to a report by the bank on Friday.

Egypt has been facing harsh economic conditions since February 2022 due to the global and domestic ramifications of the war in Ukraine and the global supply chain crisis.

The crisis caused investors to withdraw approximately $20 billion in hot money from the Egyptian market; it has forced the Central Bank of Egypt (CBE) to devalue the pound by 50 percent (according to official rates).

Egypt is seeking additional funding to close a $17 billion financing gap by 2026. The Egyptian government projects the gap for FY2023/2024 to be between $6 and $8 billion.

The country has been engaging in a $3 billion loan programme with the International Monetary Fund (IMF) which requires the government to take a group of measures including adopting a flexible exchange rate.

A mission from the fund is currently visiting Cairo to discuss a new deal which is expected to entail another currency devaluation.