The Egypt exchange traded fund is in full recovery mode after last year’s pro-democracy revolution that overthrew the Hosni Mubarak regime. Additionally, Egyptian equities saw a nice boost Tuesday as the U.S. plans to provide debt relief to the beleaguered economy.

However, the ETF is facing a key test at its 2012 high. A pullback from Tuesday’s high suggests the Egypt fund may pause for breath

The Market Vectors Egypt Index ETF (NYSEArca: EGPT) was up 1.5% during the Tuesday session on heavy trading – the fund saw volume spike to 170,000, compared to the average 40,179, according to Morningstar. The ETF is up 54% year to date.

The U.S. is nearing a deal to forgive $1 billion in Egyptian debt as part of a debt relief plan to bolster the fledgling democracy, reports United Press International. In total, Egypt owes the U.S. over $3 billion. The Obama administration is also backing a $4.8 billion loan between Egypt and the International Monetary Fund.

The benchmark EGX 30 has rallied from the lows around 4,000 in June 21 to over 5,300 after the Egyptian presidential elections. Egyptian equities are trading on a price-to-earnings of just 9.5, even after this year’s rally. In contrast, the MSCI Emerging Markets Index has a P/E ratio of just under 11 and developed markets average 12.7.

“We can see great stability compared to a couple of months back,” Nazmi Rizk, an independent Egyptian stock investor, said in a Financial Times article. “We’re on the right track. The fair value of 80 per cent of shares are definitely undervalued. We expect a 50 per cent upside.”

Egyptian equities plunged 50% in the wake of the ousting of Mubarak last year. This year, Egypt’s markets recovered to a one-year high in March after the newly elected parliament, dipped back ahead of the presidential election and recovered after Mohamed Morsi won the elections. [Political Stability Brings Investors Back to Egypt ETF]