USD/EGP Outlook:
The USD/EGP exchange rate is slightly positive but likely to move sideways. The rate is currently above its 90-day average and near the recent high, though lacking a clear decisive driver.
Key drivers:
• Rate gap: The US Federal Reserve’s preference for higher interest rates contrasts with Egypt's recent monetary policy easing, where rates were cut to attract investment.
• Risk/commodities: Oil prices remain stable, which supports EGP as lower commodity costs can help ease inflation in Egypt.
• One macro factor: The recent cabinet reshuffle aims to enhance economic restructuring and could boost investor confidence in the EGP over time.
Range:
Expect the USD/EGP to hold within its recent range, as fluctuations are likely to be limited.
What could change it:
• Upside risk: A shift towards higher interest rates by the Federal Reserve could strengthen the USD against the EGP.
• Downside risk: If Egypt's economic reforms successfully improve stability and attract foreign investments, the EGP could gain ground against the USD.
