Dollar Breaks EGP 55 Barrier as Central Bank Governor Defends Currency Flexibility

Ahmed Kamel – Egypt Daily News

Egypt News

The US dollar rose above EGP 55 at Egyptian banks on Thursday, marking a new milestone in the pound’s decline, as Central Bank Governor Hassan Abdalla defended allowing the exchange rate to move with changing economic conditions.

At the National Bank of Egypt, the dollar reached EGP 55.25 for buying and EGP 55.35 for selling by the end of trading, after rising 92 piastres. Other banks reported similar levels, though rates varied slightly. Banque Misr quoted the dollar at EGP 55.23 to buy and EGP 55.33 to sell, while several other lenders listed it at up to EGP 55.37 for selling.

The move came as Abdalla addressed a session on foreign-currency resources and debt management at Egypt Forum 2026 in the New Administrative Capital. He urged the public to understand exchange-rate changes in light of the economic conditions surrounding Egypt, arguing that movement itself is not a reason for alarm.

“What should cause concern is a stable exchange rate despite changing circumstances,” Abdalla said. His defense of flexibility reflects a policy shift intended to let the pound respond to supply and demand rather than hold it at a fixed level while pressures accumulate.

That approach is consistent with the framework promoted under Egypt’s International Monetary Fund programme. The IMF has described a freely adjusting exchange rate as a way to help the economy absorb external shocks, improve foreign-currency availability, support exporters and encourage investment. It has also stressed that exchange-rate flexibility should be accompanied by measures to limit inflation and protect vulnerable households from the cost of economic adjustment.

For Egyptians, the immediate concern is how a weaker pound affects the price of imported goods and inputs. Businesses that depend on imported components, raw materials or equipment may face higher costs, which can eventually be reflected in retail prices. The timing and size of that impact vary: companies may have supplies bought at earlier exchange rates, operate under existing contracts or absorb some costs rather than pass them on immediately.

The broader economic setting remains challenging. Egypt relies on foreign currency to pay for imports and service external obligations, while tourism, remittances, investment and trade provide important sources of dollars. Disruptions to regional trade and pressure on shipping through the Red Sea have previously weighed on foreign-currency receipts. Higher energy and food costs abroad can also raise the country’s import bill.

Recent market indicators show the scale of Thursday’s move. A market-data service recorded the dollar at EGP 55.30 on October 22, up 1.69% from the previous session. It also reported that the pound had weakened 7.55% over the month and 16.20% over the year. Those figures track a market quotation, while bank rates are the prices customers encounter when buying or selling dollars at a particular institution; they may not match exactly.

Inflation remains a central part of the picture. Egypt’s annual inflation rate was reported at 13.9% in September, down from 14.5% in August, while the central bank’s policy interest rate remained at 19%. A lower inflation reading can ease some pressure on households, but it does not mean prices are falling: it indicates that prices are rising more slowly than before. Further currency depreciation could complicate efforts to bring inflation down if higher import costs feed into local prices.

The government and central bank therefore face a difficult balance. A flexible rate can reduce the risk of a persistent mismatch between the official price of the dollar and its availability, but sharp moves can unsettle businesses and households. Meanwhile, attempts to hold the currency steady may offer short-term predictability while increasing pressure on foreign-currency reserves if market conditions have changed.

Abdalla’s remarks did not specify a preferred exchange-rate level or predict where the pound might trade next. Instead, he defended the principle that the rate should adjust when economic conditions change. The crossing of the EGP 55 threshold makes that policy more visible to the public, but the central bank’s challenge will be to maintain access to foreign currency, contain inflation and preserve confidence as the adjustment continues.

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