UBS expects up to $20bln foreign currency inflows to Egypt by Q2 2025 in best-case scenario

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Swiss investment bank UBS has developed three scenarios according to which Egypt might see a surge in foreign currency inflows over the coming four quarters ending in June 2025, Al Arabiya Business reported, citing a report by the lender.

According to the first scenario, the bank expects the Egyptian economy to see foreign currency inflows of around $7 to $8 billion during the four-quarter period, indicating the presence of a USD surplus during this period.

The second scenario entails that Egypt could secure $19 to $20 billion in net cumulative cash flow over the four-quarter period if backed by a 30% increase in foreign direct investments (FDIs) and investment portfolio flows, in addition to a rebound in remittances to the 2021/2022 fiscal year levels.

However, the less optimistic scenario shows limited access to markets and a slow recovery in Suez Canal revenues, leading to net outflows ranging between $2 and $3 billion, which puts strain on foreign currency reserves.

The lender anticipated the exchange rate of the Egyptian pound to range between EGP 46 and EGP 51 against the US dollar until the end of the year, adding that Egypt may not join JP Morgan’s Emerging Market Bond Index (EMBI) until mid-2025.

This could bring in additional inflows of $3 to $4 billion via investments in Egyptian debt instruments.