Investing.com - The exchange rate of the US dollar against the Egyptian pound remained stable during trading on Sunday, supported by positive news regarding the performance of the Egyptian default swap for 5 years in US dollars.
Egyptian debt swap contracts recorded a notable decline, falling to 438.60 basis points, equivalent to 4.38%, down by about 3%, which is the lowest level seen in more than 45 months, specifically since November 2021, according to data available through the Saudi Investing website.
(EGGV5YUSAC=R) Egyptian default swap for 5 years in US dollars
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Sovereign debt insurance risks
Over many years, the insurance risks on Egypt's sovereign debt ranged between 257 and 325 basis points, but the crisis that hit the local currency in 2016 pushed these rates up, and they jumped again in 2022 under the influence of global geopolitical tensions.
Currently, this decline coincides with a noticeable decrease in inflation rates, which fell last month to 13.9%, which gives the Central Bank of Egypt more room to move towards lowering interest and discount rates in its upcoming meeting at the end of this month.
Egypt's macroeconomic indicators show strong support signals, as exports have risen to unprecedented levels, and estimates indicate that remittances from Egyptians working abroad will exceed $36 billion by the end of the fiscal year in June, pending the release of official data.
Despite the challenges posed by declining gas production and rising energy demand during the summer, the continued flow of foreign investments and increased participation from international partners in exploration activities enhances the prospects for production to return to its record levels within two years, according to Egyptian Prime Minister Mostafa Madbouly.
These developments have helped Egypt achieve a balance in its foreign transactions for the first time in decades, which is reflected in the strong and notable declines in the dollar exchange rate against the pound.
However, two key steps remain that determine the completion of the Egyptian economic recovery path. The first relates to raising the credit rating by major rating agencies, which is conditional on reducing the debt-to-GDP ratio. The second is linked to the fifth and sixth reviews of the International Monetary Fund program, which opens the door for the disbursement of the last installments of the $8.1 billion loan.
Official data indicates that Egypt's external debt reached $157 billion by the end of the first quarter of 2025, while the dollar exchange rate against the pound fell from 51.62 in April to 48.25 on Saturday.
Dollar movements in the local market
Within the local exchange market, the dollar prices against the pound saw only slight changes between banks, with a clear stability in the movement of the American currency against its Egyptian counterpart. According to bank data, Abu Dhabi Islamic Bank topped the list of the highest buying prices at 48.31 pounds, compared to 48.40 pounds for selling.
The National Bank of Egypt offered a buying price of 48.27 pounds and a selling price of 48.37 pounds, which are almost the same levels recorded by the Commercial International Bank (CIB), the largest private bank in Egypt, where the buying price was 48.27 pounds and the selling price was 48.37 pounds.
