The clap:
Swiss investment bank UBS hypothesized three scenarios according to which Egypt might see a USD 20 billion surge in foreign currency inflows over the next four quarters ending in June 2025. On the flip side, strategists from the bank forecast outflows of up to USD 3 billion under a worst-case scenario.
The first case:
In the first scenario, the bank projects that foreign exchange inflows into the Egyptian economy will total between USD 7 and USD 8 billion by Q2 2025, suggesting the existence of a USD surplus during this time.
Number two:
In the second scenario, if Egypt can secure a 30% increase in FDIs and investment portfolio flows along with a return of remittances to the levels of the fiscal years 2021–2022, then the country could secure USD 19– 20 billion in net cumulative cash flow over the four-quarter period.
The worst case scenario:
Under the most pessimistic scenario of the three, Egypt is predicted to have a net foreign exchange outflow of USD 2-3 billion. This is if Suez Canal revenues do not bounce back to a growth trajectory after its fall in the first half of 2024 and if the country does not regain complete access to international capital markets.
UBS’s two cents for investors:
The bank notes a range-bound outlook for the EGP between EGP 46-51 against the USD for the remainder of the year and advises holding Egyptian treasury bills without hedging against FOREX fluctuations.
