CAIRO – 20 August 2025: UK-based research firm Capital Economics confirmed that the Egyptian pound has managed to retain its competitiveness in foreign markets, even after appreciating by around 5% since the start of the year, Al Arabiya reported.
The firm explained that in previous periods, such an increase often raised concerns, as it was linked to heavy currency intervention that resulted in an overvalued pound, later followed by sharp and disruptive devaluations.
This time, however, the dynamics appear different. The pound’s rise largely mirrors the weakness of the US dollar.
At the same time, the Egyptian currency has shed nearly 7% of its value against the euro since January, while staying broadly steady on a trade-weighted basis in 2025.
Capital Economics added that its real effective exchange rate index — which adjusts for inflation differences across Egypt’s trading partners — climbed about 10% since the beginning of the year.
Nevertheless, the index is still close to the lows seen after the 2016 devaluation and remains around 25% weaker than early 2024 levels.
On the trade side, first-quarter 2025 balance of payments data showed non-oil exports hitting their highest level since 2011, amounting to 10.9 % of GDP.
This, the firm said, reflects the stronger competitiveness of Egyptian exports following last year’s devaluation.
The report also noted that Egypt’s current account deficit has narrowed considerably, leaving it in a healthier position compared to the period after the 2016 devaluation.
However, the overall trade deficit widened slightly due to a weaker energy balance.
Looking ahead, Capital Economics expects the deficit to contract further in the coming quarters as tourism revenues rise and disruptions in Red Sea shipping routes subside — developments that could provide additional momentum toward stabilizing the Egyptian economy.
Wed, Aug. 20, 2025
