Middle East FX & Egypt, March 6th 2026,
· Israel extends the conflict to Lebanon.
· Strong non-oil PMI’s across GCC, pre-Iran war.
· Muted reaction on GCC FX markets.
· Egypt, the Pound lost over 7 % from its top.
For the unedited version, please find the link in my comment⬇️
Plenty of very interesting commentators, historians, retired military guys, former heads of intelligence have come out to speak on the current crisis.
One had a very interesting point, former UK Ambassador to the UN. The most favourable outcome could have been like Venezuela, won’t happen anymore. In the worst case, Iran explodes in chaos pulled between different groups and factions. A sort of Libya, Syria or Iraq except it has over 90 million people and it is right above the Gulf. Israel, the instigator of all this, is well placed to deal with it : they have lived next door to chaos almost uninterruptedly since the civil war in Lebanon. But the US will have to deal with the consequences for the sake of the region.
Meanwhile, oil prices are now flirting with 85 $ for Brent.
What is sure is that all GCC countries have strong fundamentals. Except one, Bahrain, high fiscal deficit, high levels of debt and low FX reserves.
Rather unsurprisingly, Egypt has endured the largest hit on the markets even though the country hasn’t been targeted and is further away.
Just a few numbers that will have to be reviewed in a month of time !
We had the release of several non-oil PMIs in the region this week.
· UAE’s non-oil business activity increased to its highest since April 2024 with a 55 reading for February from 54.9 in January.
· Kuwait’s non-oil PMI rose to 54.5 in February from 53 in January, the eight consecutive increase.
· Saudi’s eased a bit to 56.1 in February from 56.3 in January. It has been declining slowly since its peak of a decade in October 2025 (60.2). Still the highest in the region.
· Egypt’s non-oil PMI slipped again to 48.9 in February from 49.8 in January. Bit of a loss of momentum with a decline in output amid weaker demand and higher input costs. At the same time, Prime Minister Mostafa Madbouly reported that Egypt recorded a growth rate of 5.3 % during Q2 of Fiscal Year 2025/26 ( October-December ), the highest since 2021/22.
· Qatar’s non-energy private sector PMI rose to 50.6 in February from 50.4.
· Bahrain, higher current account surplus on a larger services surplus and tourism. For 2025 it reaches 5.8 % of GDP from 4.8 % in 2024. One analyst has been digging deeper in the data here : the basic balance ( current account and FDIs) and net Foreign Portfolio Investment ( FPI) , 7.4 bn $+, should point to a higher increase in official reserves (just 0.6 bn $ in 2025). The gap reflects net other outflows of 6.7 bn $. This lack of reserve growth could be explained by a large share of residents’ assets being held offshore and corporate profits and other funds not being ..
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