Foreign investments valued at $1.5 billion exited Egypt’s debt market within just four days due to the ongoing war between Iran and Israel, revealed a source familiar with foreign investment at the Ministry of Finance.
The escalating conflict has triggered economic fallout in Egypt, including a sharp increase in the US dollar exchange rate against the Egyptian pound, which jumped by more than 85 piasters last Sunday. The main stock index plunged by 7.6% at the start of Sunday’s session, driven by foreign investor sell-offs, before rebounding partially and closing 4.6% lower.
“Foreign investors rushed to pull their funds from Egyptian debt instruments out of fear over regional instability,” the source told Al Manassa, requesting anonymity. This exodus caused the dollar rate at the National Bank of Egypt to climb to 50.68 pounds from 49.82 pounds last Thursday, before easing to 50.28 pounds on Monday.
The source added that the flare-up in Iranian-Israeli hostilities has thrown off the government’s economic projections. “The war will have negative effects on the economy and both foreign and local investment inflows,” the source added.
The government announced on Monday the formation of a crisis committee to monitor the implications of the Iran-Israel military operations and prepare for contingencies across sectors. Members include the Central Bank governor, and the ministers of industry, planning, international cooperation, electricity, finance, supply, and petroleum, along with representatives from the Ministries of Defense and Interior, the general intelligence service, and the Administrative Control Authority.
The entire economic cabinet would also remain in constant session to assess and address the war’s economic repercussions, the source said.
Last Saturday, the government postponed the grand opening of the Grand Egyptian Museum, originally set for July 3, citing “regional developments” linked to the Iran-Israel war.
Meanwhile, a sudden drop in Israeli gas supplies to Egypt has created a supply-demand gap ranging from 1.0 to 1.2 billion cubic feet per day. This shortfall is expected to impact several key economic sectors, according to a Petroleum Ministry source who spoke to Al Manassa.
