Will the US Dollar Exchange Rate in Egypt Fall Below 40 Pounds? Parliamentary Official Responds
Date: November 30, 2025
In a recent interview, Fakhrie El-Feki, Chairman of the Egyptian Parliament’s Planning and Budget Committee, addressed the question on many Egyptians’ minds: is the US dollar exchange rate in Egypt poised to fall below 40 Egyptian pounds?
Current Exchange Rate Trends and Outlook
El-Feki noted that the Egyptian pound’s exchange rate has shown signs of stabilization and a gradual decline over the past six months. He pointed out that the dollar’s value has dropped from approximately 51.7 pounds six months ago to around 47.25 pounds currently. According to him, this downward trend is likely to continue provided that supportive economic conditions prevail.
Explaining how the currency’s value is assessed, El-Feki emphasized the importance of the "real effective exchange rate," which compares the strength of the Egyptian pound against the currencies of Egypt’s top 18 trading partners—including the European Union, the United States, China, and Japan. By weighing trade volumes with these countries and benchmarking against a base year, authorities can determine whether the pound’s current valuation is above, below, or at its fair value.
Some international institutions, including Goldman Sachs, have estimated that the fair value of the Egyptian pound lies in the mid-30s range relative to the US dollar.
Factors Influencing Exchange Rate Stability
El-Feki highlighted that if regional, global, and domestic conditions remain stable, the dollar could realistically fall below 40 pounds, which he described as an excellent outcome. This contrasts with some opinions advocating that the exchange rate should not drop below 45 pounds.
Impact on the Egyptian Economy
A lower dollar price is advantageous for Egypt’s industrial sector because about two-thirds of Egypt’s imports—around $80 billion—consist of raw materials and intermediate goods. Purchasing dollars at 40 pounds instead of 47 reduces production costs significantly. Coupled with an interest rate cut of 6.25% so far, the cost of manufacturing within Egypt decreases, enhancing competitiveness.
El-Feki elaborated that with lower costs, factories are better positioned to penetrate both local and international markets. While a stronger pound might increase export prices, expanding production capacity—such as acquiring new production lines—can offset price effects through larger output volumes.
Given this context, the chairman stressed that intervention by the Central Bank in the exchange market to fix rates is unnecessary. Egypt follows a free-floating exchange rate policy, which the International Monetary Fund (IMF) supports to avoid restrictive market interference.
He dismissed the idea of artificially maintaining the dollar at 45 pounds, noting the IMF agreement stipulates that half of the proceeds from any foreign direct investment transactions must directly reduce the national debt. Such mechanisms, including high-profile deals like the "Ras Al Hikma" agreement, render intervention redundant.
Government Response to Economic Challenges
El-Feki also reviewed the performance of the government led by Prime Minister Mostafa Madbouly since June 2018. He acknowledged that the government faced unprecedented shocks not caused by its policies, including:
- The COVID-19 pandemic causing global economic shutdowns.
- The Russia-Ukraine war from February 2022, disrupting global supply chains and sharply increasing oil and wheat prices—Egypt being the world’s largest wheat importer.
- The April 2023 crisis in Sudan, resulting in millions of refugees entering Egypt.
- The “Al-Aqsa Flood” events, which, while Egypt was not a primary actor, required Egyptian political and humanitarian responses.
Despite these pressures, Egypt has pursued a 46-month economic reform program set to conclude in October 2026. ### Foreign Investment Deals as Economic Milestones
El-Feki underscored the significance of the Ras Al Hikma investment deal as a transformative moment for the country, bringing in foreign direct investment that added value, created jobs, and boosted foreign currency reserves. He noted that ongoing investments, including those from Arab partners, followed suit, enabled by Egypt’s secure political climate and sound infrastructure.
Managing Egypt’s Debt
Addressing Egypt’s public debt situation, El-Feki noted that the challenge is global and not unique to Egypt. Domestic debt—denominated in local currency—is managed carefully to avoid inflation spikes. Egypt’s external debt stands between $160 to $161 billion currently. The government aligns with IMF conditions, directing half the proceeds from external direct investments towards reducing this debt, an approach proven effective in deals like Ras Al Hikma and the “Alam Al-Rom” partnership with the Qatari Sovereign Fund.
Importantly, Egypt’s external debt remains within internationally accepted safe limits (30%-50% of GDP). Through these investment-driven debt reductions, ratios decreased from around 43% of GDP to approximately 36%.
Outlook and Social Impact
Politically, with ongoing parliamentary elections, El-Feki anticipates the government to resign in line with convention and hand over to the newly elected parliament. He praised the current government’s resilience through multiple crises and highlighted the importance of completing the economic reform program.
On the social front, he expects gradual positive effects on citizens’ lives through lower inflation and job creation. Enhancements in social support systems, such as increased subsidies and the expansion of cash transfer programs like the “Unified Card,” have begun, with plans to roll out such reforms nationwide potentially in the next budget cycle.
Conclusion
Fakhrie El-Feki’s insights suggest cautious optimism: a dollar exchange rate below 40 Egyptian pounds is achievable under stable conditions and would bolster Egypt’s industries by reducing import costs and encouraging production growth. Coupled with strong foreign investments and prudent debt management, Egypt’s economic outlook for the coming years appears promising, aiming to bring tangible improvements in social and economic wellbeing by 2026. —
For the full interview with Fakhrie El-Feki, please visit Al Arabiya Business.