Morgan Stanley reports improved resilience in Egyptian economy

Morgan Stanley has observed a decrease in foreign portfolio investment outflows from Egypt during the recent surge in oil prices, compared to the higher levels of divestment seen following the initial shock in early 2026. This trend suggests an improved ability of the Egyptian economy to manage external pressures.

The bank noted that the economy is benefiting from strengthened foreign currency sources, specifically through Suez Canal revenues and remittances from Egyptians working abroad. While the Egyptian pound remains sensitive to oil price fluctuations, high yields on local assets have helped offset some of the impact of currency depreciation.

Despite this resilience, Morgan Stanley cautioned that a further 5% to 7% decline in the Egyptian pound could trigger new waves of capital outflows. Additionally, an early return to interest rate cuts by the Central Bank of Egypt might reduce the attractiveness of local assets. The bank expects urban inflation to slow to approximately 11.8% by December.