Egypt’s Pound Hits Record Low as Sisi Weighs a Saudi War Role
Egypt’s currency fell to an unprecedented 56 pounds to the dollar on Monday, exposing how quickly the widening Gulf war is reaching into the wallets of more than 100 million Egyptians. The record came hours before parliament was expected to decide whether the armed forces could help defend Saudi Arabia against Houthi attacks.
The collision is stark: Cairo is being asked to widen its military commitments just as its own economy absorbs another shock. The Egyptian pound crossed 56 to the dollar on October 26, according to LSEG data reported by Reuters. The benchmark EGX30 share index fell 2 percent in early trading before recovering part of the loss.
That followed an even sharper Sunday selloff. The Egyptian Exchange suspended trading for 30 minutes after the broader EGX 100 EWI index plunged 10 percent. Ahram Online had already reported the dollar approaching 56 pounds on October 25, with official bank selling rates clustered around 55.75 to 55.89.
This is more than a bad morning in the currency market. Egypt imports much of the food, fuel and industrial equipment its people and factories depend on. A weaker pound raises the local cost of every dollar-priced shipment. Workers whose wages are paid in pounds lose purchasing power before employers or the state can respond.
Central Bank Governor Hassan Abdalla has defended the flexible exchange-rate system as the country’s “first line of defense” against outside shocks. He argued that Cairo’s earlier attempt to hold the pound at an artificial level after Russia’s invasion of Ukraine helped create a black market. “The most important thing for us is unifying the exchange rate, not the exchange rate itself,” Abdalla said at the Egypt Forum 2026.
The policy may prevent a hidden dollar market from swallowing official trade, but it does not make depreciation painless. Flexibility transfers the shock onto households through higher prices. The exchange rate can be unified while living standards continue to fracture.
The military question deepens the contradiction. President Abdel Fattah el-Sisi has pledged to help defend Saudi territory if Riyadh asks. Parliament postponed an earlier closed-session decision and was scheduled to return to the issue Monday. Reuters reported that the authorization could allow defensive support against missiles and drones, while Egyptian officials have stressed that Cairo does not intend to attack Yemen.
Associated Press reporting last week said the proposed package could include air-defense systems and aircraft, without Egyptian ground forces entering Yemen. Britain and France have also offered defensive support as Houthi strikes hit Saudi airports, cities and energy infrastructure. Washington has limited its role, leaving regional governments to assemble a patchwork shield around the kingdom.
Egypt has reasons to care about the outcome beyond its alliance with Riyadh. Houthi advances near the Bab el-Mandeb strait threaten the Red Sea route that feeds the Suez Canal, one of Cairo’s most valuable sources of hard currency. Saudi Arabia has also supported Egypt with deposits, investment and energy supplies. A security breakdown in the kingdom would quickly become an Egyptian economic problem.
But intervention carries its own price. Egypt’s disastrous war in Yemen during the 1960s consumed soldiers, money and political attention. The government insists that today’s mission would remain defensive, yet wars have a habit of expanding beyond the language used to authorize them.
The pound’s fall is therefore a political warning, not only a financial statistic. Cairo cannot treat military commitments abroad and austerity at home as separate ledgers. If the state spends scarce foreign currency protecting another monarchy while Egyptian families pay more for bread, transport and medicine, the cost will not stay confined to trading screens.
Egypt’s rulers are trying to defend two fronts at once: the Saudi state from missiles and the Egyptian economy from a regional shock. Monday’s record suggests the second front is already breaking through.
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