CAIRO, May 18 – Fitch Ratings said Egypt’s flexible exchange rate has helped the country manage capital outflows and regional tensions, supporting its B sovereign rating with a stable outlook.
In a recent report, the agency noted that the Egyptian pound has fallen about 10% against the US dollar since late February after more than $10 billion in foreign funds left the market.
Fitch said the approach has helped preserve foreign reserves, which stood at about $53 billion at the end of April, while keeping the official and parallel exchange rates closely aligned.
Net foreign assets held by the central bank and commercial banks fell to $22 billion but remain above levels seen before Egypt’s last credit rating upgrade in November 2024.
The rating firm expects reserves to ease to around $50 billion by the end of fiscal year 2026/2027, assuming stability in key global shipping routes. It warned that a prolonged conflict could raise pressure on Egypt’s external position and push up inflation through higher energy import costs.
Despite these risks, Fitch pointed to stronger inflows from remittances, which rose 30% to $22 billion in the first half of the fiscal year, helping support foreign currency liquidity.
The agency also expects continued financial backing from Gulf partners, through investment and deposits, which could further cushion Egypt’s external financing needs.
