Morgan Stanley Predicts Three Exchange Rate Scenarios for Egyptian Pound

Morgan Stanley has outlined three scenarios for the Egyptian pound's exchange rate, projecting the US dollar to trade between EGP 46 and EGP 52 in the period ahead.

The bank's latest report assumes different outcomes surrounding the Strait of Hormuz, regional oil supplies, foreign investment, and Egypt's external financing position.

Under Scenario One, Morgan Stanley expects the dollar to trade between EGP 46 and EGP 48, assuming a return to normal maritime traffic through the Strait of Hormuz and Brent crude prices falling to around $65 a barrel in the second half of 2026 and $60 in 2027.

This scenario is driven by lower oil prices reducing Egypt's energy import bill and easing pressure on its external accounts, with the current-account deficit narrowing to around $13 billion supported by stable remittance inflows.

Scenario Two places the exchange rate at between EGP 48 and EGP 50, assuming the Strait of Hormuz reopens during the second half of 2026 and regional oil supplies recover sufficiently to return the global market to a surplus in 2027.

Oil prices would average around $75 to $70 a barrel under this scenario, rebuilding global inventories and excess supply returning to the market. Morgan Stanley expects Egypt's current-account deficit to reach around $14 billion, while the energy deficit could rise to approximately $19 billion in fiscal year 2027.

The third scenario is the most challenging, placing the dollar between EGP 50 and EGP 52 due to prolonged elevated oil prices and weaker foreign direct investment inflows. Morgan Stanley said such conditions would widen Egypt's current-account deficit and could produce an external financing gap of up to $4 billion.