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Hany Genena, a senior economist in Egypt, forecasts that the weakness of EGP versus the USD over the past two years is the first stage of a four-year long adjustment process that will continue till 2026. In the report, his view is supported by three core variables: a) the outlook for the inflation differential versus the US, b) stiffening competition from regional peers, particularly Turkey and Saudi Arabia and c) growing downward pressure on the yuan in an environment of dwindling domestic demand in China and intensifying trade war with the US.
To be consistent with the purchasing power parity over the medium term, Genena expects that the USD/EGP should hover around 60 by 2026, versus 48 at present.