Egyptian pound sinks to record low as investors flee

The Egyptian pound fell to its weakest official level on record on March 8th, dropping for the first time below 52 pounds against the US dollar amid growing investor withdrawals from Egypt’s debt markets, as reported by Africa News via AP on March 9th.

Currency trading screens in Cairo showed the dollar buying at around 52.15 pounds and selling at 52.25 at major banks, including Abu Dhabi Islamic Bank, Bank of Alexandria, and Banque Misr.

The move represents a fall of roughly 4.3 per cent in a single day and marks the lowest official exchange rate ever recorded for the Egyptian currency.

Analysts say the decline is linked to a wave of foreign capital leaving the local bond market amid heightened regional instability. Investors have been selling off Egyptian Treasury bills and bonds over the past week, contributing to downward pressure on the currency.

The market turbulence comes as tensions escalate in the Middle East amid an ongoing conflict involving the United States and Israel against Iran, creating uncertainty across regional financial markets.

Although authorities have not officially confirmed the size of the outflows, preliminary banking data and analyst estimates suggest that between $2 billion and $5 billion may have been withdrawn from Egyptian debt markets since the conflict began about a week ago.

Foreign investors had previously been drawn to Egyptian Treasury securities because of their relatively high real returns. However, the sudden shift in sentiment has highlighted the vulnerability of emerging markets to geopolitical shocks.

The latest currency slide comes after Egypt attempted to stabilise its exchange rate following a severe economic crisis in early 2024. At the time, a shortage of foreign currency pushed the dollar to about 70 pounds on the black market, while the official rate remained fixed at 30 pounds.

Later that year, the government moved to unify official and parallel exchange rates under an economic reform programme supported by the International Monetary Fund, bringing the official rate closer to market levels and stabilising it at around 50 pounds per dollar.

The sharp depreciation on March 8th suggests renewed pressure on Egypt’s currency as global and regional tensions weigh on investor confidence.

Africa News visa AP, Maghrebi.org