Foreign Currency

Egypt’s foreign currency reserves to soar $16.2bln in FY24/25 – Report

Egypt’s international reserves are expected to surge by $16.20 billion during the fiscal year (FY) 2024/2025, according to a report by JPMorgan, an American multinational finance company.

The report expected the country’s reserves to rise further by $2.60 billion in FY25/26.

JPMorgan also forecast the Egyptian economy to grow by 4.30% in FY25/26, up from 2.8% in FY23/24.

Further adjustments to fuel prices, aimed at reducing the subsidy bill, could pose upside risks to Egypt’s inflation outlook, given that fuel comprises about 2% of the inflation basket, the finance company said.

Despite expectations of slower inflation, the Central Bank of Egypt (CBE) is unlikely to implement monetary easing this year, upholding a tight monetary policy stance to control inflation expectations and mitigate currency pressures, the report said.

“We now have much less conviction about the additional 200 basis points (bps) hike we forecast for the May meeting, as the March inflation print surprised to the downside after the big jump recorded in February,” JPMorgan said.

Egypt’s annual headline urban consumer price index (CPI) inflation declined to 33.1% in March 2024 from 36% in February.

The country’s international reserves leapt $5 billion to $40.36 billion at the end of March.

In March, the CBE hiked interest rates by 600 bps, or 6%. The central bank is set to hold a monetary policy meeting on 23-24 May.

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