Dollar Inflows Surge to Egypt Amid Calls for Better Management

Egypt’s economy recently got a big boost from positive events, like the “Ras al-Hikma” deal in February and currency changes in March. However, challenges remain, with tourism, remittances, and the Suez Canal facing significant impacts from regional and global shifts.
Remittances from Egyptians abroad dropped by about 30%, and Suez Canal revenues fell by 50%. On the bright side, agricultural exports surged in early 2024, reaching $1.5 billion.
This uptick in exports reflects Egypt’s efforts to tap into this crucial revenue stream, especially with its currency devaluation making exports more competitive.
Since Egypt announced the $35 billion Ras al-Hikma deal on February 23, its economy has been on the upswing.
The black market slowed down immediately, and foreign investments in Egyptian bonds picked up after the currency flotation and a 6% interest rate hike on March 6.
Moreover, the International Monetary Fund (IMF) agreed to increase a financing loan from $3 billion to $8 billion.
The EU followed with loans, grants, and aids totaling $8.1 billion, and pledged to boost cooperation to a strategic partnership.
The World Bank offered a $6 billion financial support package for Egypt. Rating agencies Moody’s and Standard & Poor’s shifted their outlook on Egypt’s economy to positive.
Egypt also inked deals with seven international entities in energy and infrastructure, aiming for $40 billion in investments over 10 years for green projects. Italian group “Danieli” committed up to $4 billion to build a green steel complex in Egypt.
In mid-March, Prime Minister Mostafa Madbouly mentioned that remittances from Egyptians working abroad were slowly returning to normal levels, as the black market diminished due to similar prices with the official rate.
Goldman Sachs expects remittances to gradually increase, reaching around $30 billion this year and possibly exceeding $33 billion by 2027.
Data from the first quarter of the fiscal year 2023-2024 showed a nearly 30% drop in remittances from Egyptians abroad compared to the same period last year, down to $4.5 billion from about $6.4 billion. Egypt’s fiscal year runs from July 1 to June 30.
Sarah Saada, a macroeconomic analyst at CI Capital, predicted in a research note that remittances from Egyptians abroad would return to normal levels this year, reaching $31.6 billion.
The government aims to boost annual remittances from Egyptians abroad by 10% by 2030, reaching around $53 billion.
On March 25, Madbouly announced the government, with the banking sector’s help, managed to secure hard currency and streamline procedures for goods release from ports.
However, cargo owners are holding back, expecting the dollar’s value to drop before releasing goods and stabilizing prices.
Last Thursday, Egypt’s Finance Ministry raised 25 billion pounds from one-year treasury bills and 35 billion pounds from six-month treasury bills in an auction, according to the central bank’s website.
The average yield on the one-year bills dropped to 25.9% from 32.3% earlier this month, and on the six-month bills to 25.74% from 31.84%.
This reflects growing interest in short-term local debt among foreign investors since the currency flotation.
Additionally, the Central Bank of Egypt, acting for the Finance Ministry, sold three-year fixed-rate treasury bonds last week, yielding 25.46%, down from 26.23%, amounting to 2.9 billion pounds.
This follows a sharp decline in Egypt’s sovereign debt insurance costs, indicating increased confidence in its financial stability.
Speaking to Asharq Al-Awsat, economic expert Sherif Henry urged “prudent management” of dollar cash flows and avoiding fixing the exchange rate after receiving an IMF loan, as seen in the past.
Egypt is set to receive the first installment of the IMF loan, $820 million, next week, according to Madbouly’s statements.
The IMF will hold a press conference on Monday to officially announce the loan increase and its vision for Egypt’s economy.
Henry stressed the need for Egypt to focus on key sectors like industry, tourism, and exports, seizing the current momentum.

Saudi Arabia’s Tadawul All Share Index (TASI) ended the second week of March with a slight decline for the third consecutive week, closing down 0.73% at 11,725.88 points, compared to the previous week's close of 11,811.11 points.

In an analysis of the market performance during the week ending March 13, Dr. Suleiman Al-Humaid Al-Khalidi, a financial market analyst, told Asharq Al-Awsat that the market experienced a sharp decline not seen in years, coinciding with a drop in global markets, particularly in the US, where $2 trillion in value was wiped out in a single day.

This accounted for roughly 60% of the total market value of the Saudi stock market.

Al-Khalidi noted that the key player in the Saudi market is the banking sector, especially Al-Rajhi Bank's shares, which showed resilience and did not follow the downward trend. This was attributed to the strong profits reported by the banking sector in 2024.

The primary factors contributing to the market’s decline include global economic pressures, particularly US tariffs on most global economies, ongoing global uncertainty, and the Federal Reserve's tight monetary policies, he explained.

These factors have significantly impacted liquidity flows into financial markets. Additionally, fluctuations in global oil prices, despite recent stability, have also played a role.

This downturn has been accompanied by caution among sovereign wealth funds, investment institutions, and some portfolios in injecting new liquidity or altering their positions until there is more clarity in the financial markets, he went on to say.

Moreover, Al-Khalidi said that the Saudi stock market has not accurately reflected the true strength and size of the Saudi economy, which has grown to SAR 4 trillion, up from SAR 600 billion in 2016, before the launch of Vision 2030.

Additionally, the country’s GDP has reached approximately $1.1 trillion.

Looking ahead to the market's performance in the coming week, he noted that there are strong support levels at 11,550 points, followed by 11,450 points.

These levels could help shift the market toward an upward trajectory and better reflect the robust growth of the Saudi economy.

Al-Khalidi emphasized that the banking and energy sectors could play a leading role in driving the market higher, pushing the index beyond this week’s closing levels.

He also pointed out that some stocks are hitting new lows, presenting significant investment opportunities for those seeking safe havens with steady returns in the Saudi market.

Dollar Inflows Surge to Egypt Amid Calls for Better Management