The outlook for the Egyptian pound in 2026 is shaped by a complex interplay of supportive forces and resistance factors, creating a landscape rich in opportunity but fraught with risk. Domestic dynamics—most notably monetary and fiscal policy—intersect with external influences such as global financial conditions, capital flows, and commodity price movements, making the pound’s trajectory highly sensitive to both local decisions and international developments.
The landmark monetary reform decisions announced by the Central Bank of Egypt (CBE) on 6 March 2024 represented a decisive turning point. These measures fundamentally restructured Egypt’s foreign exchange market, restored confidence in the national currency, and laid the foundations for relative exchange rate stability throughout 2025.
Supported by a firmly upheld flexible exchange rate regime and a set of improving macroeconomic indicators, the Egyptian pound regained ground against the US dollar, appreciating by 6.01% over the course of 2025. This followed a historic low in April 2025, when the dollar reached an unprecedented EGP 51.72.
As 2026 begins, the pound carries the weight of past challenges alongside the promise of emerging opportunities. It is therefore reasonable to describe the coming year as a “real test” of the currency’s resilience and the durability of recent policy gains. The central question is whether the pound can withstand existing and potential resistance pressures—and whether the available support factors will prove strong enough to prevail.
Any assessment of the pound’s future must begin with the support forces that have already materialised and show signs of sustainability.
Foremost among these is the return of Egyptians’ remittances from abroad to official banking channels, reflecting renewed confidence in the financial system following exchange rate unification. During the first ten months of 2025, remittances reached a record $33.9bn, providing a critical and stable source of foreign currency.
This has been complemented by expectations of a gradual recovery in tourism and a potential easing of regional tensions that have weighed heavily on Suez Canal revenues. At the same time, the strengthening of the banking sector’s net foreign assets has enhanced its capacity to meet foreign currency demand, reinforcing confidence in the pound. Net foreign assets rose to $20.783bn by the end of September 2025, reflecting a markedly stronger external position.
In parallel, foreign exchange reserves have continued to rise steadily, surpassing the $51bn threshold. This level provides the CBE with a powerful “shock absorber”, enabling it to manage market volatility with greater flexibility and without destabilising interventions.
Against these supportive factors stand a set of powerful resistance forces. The most pressing of these is Egypt’s external debt servicing schedule for 2026, widely regarded as the most demanding in recent years. Total repayments—principal and interest—are estimated at around $32.3bn, generating sustained demand for foreign currency whenever obligations fall due.
Such pressures increase the economy’s exposure to portfolio flows, or “hot money”. While these inflows can provide rapid liquidity, they also represent a structural vulnerability, given their tendency to exit swiftly during episodes of global or domestic turbulence—leaving the pound exposed to sudden swings.
This is where the importance of Egypt’s relationship with the International Monetary Fund becomes particularly clear. Engagement with the IMF extends beyond financing; it serves as a powerful signal of policy credibility to international investors. Any disruption to this relationship could sharply limit access to external financing and push sovereign risk premiums and debt insurance costs to critical levels.
A continued appreciation of the pound could yield tangible benefits, particularly in terms of price stability and improved purchasing power. However, excessive strength also carries risks, notably for tourism and exports, as higher costs in foreign currency terms could undermine competitiveness in external markets.
For this reason, the pound’s outlook should be assessed through multiple scenarios, each requiring tailored policy responses to manage risks and maximise potential gains in an uncertain global environment.
The first, and most likely, is the baseline scenario, under which the pound remains broadly stable within a range of EGP 46 to EGP 50 per dollar throughout 2026. This outcome assumes continued success in refinancing external obligations, steady inflows of foreign direct investment, a recovery in Suez Canal revenues, the disbursement of the fifth and sixth IMF review tranches, and the absence of major geopolitical escalations.
The optimistic scenario envisions a stronger recovery, with the pound appreciating to between EGP 44 and EGP 48 per dollar. Achieving this would require a decisive acceleration of the government’s privatisation programme, a full normalisation of canal revenues, a sharp decline in inflation, unwavering commitment to exchange rate flexibility, and sustained growth in traditional foreign currency-generating sectors.
By contrast, the risk scenario would materialise in the event of unexpected external shocks or a sudden reversal of portfolio inflows, potentially pushing the pound temporarily beyond EGP 55 per dollar.
Navigating 2026 successfully requires more than tactical liquidity or exchange rate management; it demands deeper economic restructuring. Sustainable currency stability ultimately depends on transforming liquidity into productive investment—particularly in manufacturing and export-oriented sectors—reducing import dependence, and creating genuine, long-term demand for the pound.
This process must be supported by extending debt maturities, continuing the shift from short-term to longer-term financing instruments, and reducing the debt-to-GDP ratio to ease fiscal pressures. It also requires a renewed focus on attracting foreign direct investment that builds productive capacity and creates jobs, rather than relying excessively on volatile portfolio flows.
Equally important is maintaining transparency and policy consistency, especially through a credible and flexible exchange rate regime that encourages investors to operate within the formal system.
The Egyptian pound enters 2026 with a rare and valuable opportunity to consolidate stability. Whether this opportunity is realised will depend on preserving flexibility as a guiding principle and moving decisively from a phase of shock absorption to one of comprehensive, productivity-driven growth.
Mohamed Abdel Aal – Banking expert
