The financial investment company CI Capital estimated that Egypt experienced a substantial influx of foreign exchange amounting to approximately $26 billion during February and March, as per a research note.

This surge in foreign funds was attributed to portfolio flows and the initial installment of the Ras El Hekma project deal with the UAE.

The inflows from fixed income portfolio investments alone reached between $14 billion and $16 billion at the end of March, CI Capital added.

Of this, around $8 billion was allocated to settling backlogged import orders, while an additional $4 billion was earmarked for clearing arrears owed mainly to foreign oil companies, according to the research note.

CI Capital noted a significant improvement in commercial banks' net asset deficit, which decreased by $4.4 billion to $13.2 billion.

It also highlighted the implications for Egypt's currency, suggesting that the gross foreign currency reserves signal a potential for the pound to appreciate by 20% from its current trading value of EGP 48.5/USD.

However, the note added that the pound is unlikely to achieve a fair valuation, unless foreign currency inflows did not return to levels seen in the fiscal year (FY) 2021/2022.

Looking ahead, CI Capital anticipates that inflation will surpass the Central Bank of Egypt's (CBE) target until 2025.

It also projects average inflation for the current year to range between 25% and 27%, significantly higher than the CBE's target of 7%.


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