Cash Inflows Cushion Cairo’s External Deficit
Egypt’s remittances hit US $27 billion in 8 months, bolstering FX reserves and easing T-bill yields as DXY holds firm and CL=F stays above US $80. The inflow offsets import costs and steadies the pound’s external balance.
Egypt’s steady inflow of diaspora remittances—nearing US $27 billion in eight months—has become a critical counterweight to its foreign-exchange crunch. As global inflation eases and the dollar (DXY) remains firm, returning Egyptians have kept the current-account deficit contained, offsetting import bills inflated by energy and food prices. The surge also limits the need for deeper pound (EGP) depreciation, stabilising inflation expectations around 28 percent.
Remittances now outpace Suez Canal receipts and tourism combined, shaping a de-facto monetary stabiliser. With Gulf economies recovering and labour demand rising in Saudi Arabia and the UAE, flows could top US $38 billion by year-end if oil (CL=F) stays above US $80 a barrel. The Central Bank of Egypt’s new digital-transfer incentives—fee rebates and real-time settlement—have channelled more inflows through formal routes, tightening spreads between official and parallel FX markets.
The remittance-driven liquidity has eased short-term sovereign yield pressure; 12-month T-bill rates slipped 40 bps since September, while hard-currency Eurobond yields narrowed 60 bps on secondary markets. Yet structural vulnerabilities remain: over-dependence on external cash, limited export diversification, and ongoing debt-service peaks exceeding US $30 billion annually.
Forward risks hinge on oil-price volatility, Gulf remittance taxation debates, and domestic inflation control. If core CPI moderates below 25 percent by Q2 2026, the pound could re-anchor near EGP 49–51 per USD, consolidating Egypt’s external-account resilience.
