Africa Currency Weekly (with AZA)

The Naira plays mountaineering, the Cedi in the trough of the tourist wave, the Rand continues to fall, the Egyptian Pound in marble, the Kenya Shilling suspended from reserves, the Ugandan Shilling doped, the Tanzanian Shilling coaxed by the IMF. In this weekly column on African currencies, experts from AZA, the largest non-bank foreign currency broker in Africa, with a transaction volume of more than $ 1 billion per year, analyze the evolution of currency fluctuations on the continent.

Look at IATF for $ 40 billion increase in African trade
The second Intra-African Trade Fair (IATF) was held last week in South Africa, an event expected to attract $ 40 billion in trade and investment to the continent. The fair showcases the African Continental Free Trade Area (FTAA) as the world’s largest single market for goods and services – covering 54 of the 55 African Union member states (Eritrea has yet to sign the ‘OK). With political and business leaders gathered in Durban, the IATF represents a test for AfCFTA’s mission to boost intra-African trade and accelerate development and economic growth across the continent. Chief Risk Officer, AZA.

Naira stable at highest level since September
The Naira was trading at 545 against the dollar in the unofficial market this week, maintaining its highest level since early September as demand for the greenback continues to decline. Nigeria’s foreign exchange reserves fell to $ 41.5 billion this week, down about $ 100 million, according to the central bank’s 30-day moving average. Inflation also fell for the seventh consecutive month, as prices rose 15.99% in October from 16.63% a month earlier, on the back of lower food costs. Given weak dollar demand which is unlikely to change, we expect the Naira to hold around the 540 mark over the coming week.

The recovery of tourism in Ghana is insufficient to support the Cedi
The Cedi has weakened against the dollar this week, falling from 6.11 late last week to 6.126, as inflationary pressures continue to exert. Tourism has started to recover from the crisis caused by the coronavirus, growing to just over 350,000 Canadian travelers in the first half of the year, compared to around 200,000 in 2020 following a campaign national promotion. A further upturn in international tourism is expected to increase foreign exchange inflows into the country in the longer term. For now, although the Bank of Ghana continues to intervene in the market through its futures auctions, we expect the downward pressure on the Cedi to continue in the coming week.

The Rand has fallen for 8 months, despite the strength of the dollar and the power cuts
The Rand fell to its lowest level against the greenback since early March on Thursday, trading at 15.50 from 15.35 late last week, amid a stronger dollar and concerns about the long-term implications of the country’s electricity problems, with the direction of this week’s tariff decision over the next few days.

Egyptian Pound stable as economic outlook improves

The Egyptian Pound was little changed against the dollar this week, trading at 15.68 / 15.76. The Arab Monetary Fund said Egypt’s GDP is expected to grow 5.4% next year, as the country’s economy is less affected by the coronavirus pandemic in part because the government’s economic reforms have improved its economy. resilience. We expect a stable pound next week.

The recovery of tourism in Ghana is insufficient to support the Ced

The Cedi has weakened against the dollar this week, falling from 6.11 late last week to 6.126, as inflationary pressures continue to exert. Tourism has started to recover from the crisis caused by the coronavirus, growing to just over 350,000 Canadian travelers in the first half of the year, compared to around 200,000 in 2020 following a campaign national promotion. A further upturn in international tourism is expected to increase foreign exchange inflows into the country in the longer term. For now, although the Bank of Ghana continues to intervene in the market through its futures auctions, we expect the downward pressure on the Cedi to continue in the coming week.

The Rand has fallen for 8 months, despite the strength of the dollar and the power cuts
The Rand fell to its lowest level against the greenback since early March on Thursday, trading at 15.50 from 15.35 late last week, amid a stronger dollar and concerns about the long-term implications of the country’s electricity problems, with the direction of this week’s tariff decision over the next few days.

Egyptian Pound stable as economic outlook improves

The Egyptian Pound was little changed against the dollar this week, trading at 15.68 / 15.76. The Arab Monetary Fund said Egypt’s GDP is expected to grow 5.4% next year, as the country’s economy is less affected by the coronavirus pandemic in part because the government’s economic reforms have improved its economy. resilience. We expect a stable pound next week.

Kenyan Shilling hits new record as reserves climb

The Shilling weakened to a new record low against the dollar this week, trading at 111.90 / 112.10 from 111.70 / 111.90 at the close of last week, with activity d Increased imports in sectors such as energy ensuring that demand for the greenback continues to outweigh supply. We are seeing the currency stabilize at these levels, given the increase in Kenya’s foreign exchange reserves from $ 9.07 billion to $ 9.09 billion. Most likely, this is an increase in remittances, which totaled $ 337 million in October, an 8.9% increase from September’s inflow.

Pressure from the Ugandan Shilling to reduce investment inflows

The Shilling depreciated to 3530/3540 against the dollar this week from the 3525/3535 at the end of last week, driven by interbank demand and business demand for hard currencies. Activity in the Ugandan capital Kampala slowed after a bomb in the city killed three people and left several others injured. The IMF said in a recent report that the Shilling is moderately overvalued, having gained 3.5% against the dollar this year, making it Africa’s fifth best-performing currency. However, we expect the Shilling to remain stable in the near term thanks to expected capital inflows, including a £ 2bn loan for an industrial park offered by UK Export Finance (UKEF), the credit agency to export from UK.

IMF l in pliquidity will keep the Tanzanian Shillingace

The Shilling was stable this week, trading between 2294 and 2310 after the IMF approved a quick disbursement of $ 372 million from the credit facility to Tanzania to mitigate the impact of the COVID-19 pandemic and support its economic recovery. Part of these funds will be used to finance the country’s response plan to mitigate the health and social effects of the pandemic. We expect the Shilling to remain stable over the coming week and for dollar demand from the manufacturing and energy sectors to match supply. Terry Karanja, Treasury Associate, AZA.

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