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Bond Market News
Egypt’s Dollar Bonds Drop Amid Middle East Tensions
March 12, 2026
Egypt’s bonds have traded weaker since the beginning of the month following the onset of geopolitical tensions in the Middle East. The Egyptian Pound has fallen by 7.6% with the nation seeing capital outflows. About $7bn in portfolio investments have exited the country since mid-February, though this is still lower than the $20bn outflows seen during the Russia-Ukraine war in 2022. Egypt’s economy heavily relies on food and energy imports and is vulnerable to external shocks. Analysts note that rising global energy prices are straining the budget, forcing the government to raise fuel prices by up to 17% and curb non-essential spending. Last week, authorities quickly tried to allay concerns, saying commodities are secure and pledging wage rises. Analysts believe that Egypt enters this period from a stronger financial position due to reforms tied to its $8bn IMF program and a broader $57bn international support package. The flexible exchange rate has acted as a shock absorber, allowing the pound to weaken without draining reserves. However, risks remain from higher energy import costs, reduced Israeli gas supplies, and potential impacts on tourism and remittances, which are two key sources of foreign currency. Egypt’s dollar bonds have dropped by 2-4 points across the curve since start of the Middle East war, as seen in the chart above.
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