AZA Finance FX Week Ahead: Ghana trade deal with Rwanda to help boost exports


Uganda’s $10bn oil deal a boost for East Africa
Uganda has agreed a $10bn deal with TotalEnergies, the China National Offshore Oil Corporation and the country’s state-owned oil company Uganda National Oil Company to develop oil fields, processing facilities and a pipeline network with Tanzania.

Michael Nderitu
Head of Trading, AZA

The investment is projected to make Uganda a 230,000-barrels-a-day crude producer—potentially the seventh biggest on the continent—providing a boost for the wider region given that dependence on oil imports accounts for a large share of FX purchases and the development could bring significant savings.

Murega Mungai
Trading Desk Manager, AZA

Naira climbs as CBN rolls out productivity programme
The Naira strengthened against the dollar on the unofficial market this week, trading at 568 from 570 at last week’s close amid reduced demand for the greenback.

The central bank this week announced the first batch of successful applicants to its funding programme for companies that have the potential to boost local production and productivity.

About NGN23bn was disbursed to 28 companies across the manufacturing, agriculture and healthcare sectors.

Meantime, Nigeria’s FX reserves continued to decline, falling by around $200m to just over $40bn. We expect the Naira to remain close to the 570 level.

Ghana trade deal with Rwanda to help boost exports
The Cedi weakened further against the dollar this week, depreciating to 6.282 from 6.280 at last Friday’s close as the supply of FX lagged demand. Ghana signed an agreement with Rwanda to strengthen trade and economic ties between the two countries.

The agreement should help to boost exports, attract investment and drive more tourism-related activities in Ghana.

Shorter-term, we expect the Cedi to continue trading weaker given the constrained supply of dollars. 

Rand bounce back may be short lived
The Rand appreciated against the dollar this week, bouncing back to 15.3 from 15.6 at Friday’s close after the South African Reserve Bank’s 25bps rate hike last week.

Further gains were muted by the prospect of faster policy tightening in the US amid rising global inflation, fears of a potential military conflict between Russia and Ukraine, and concerns around further Covid variants damping overall appetite for emerging market assets.

We see risk aversion continuing to put downward pressure on the Rand in the near term.

Egypt’s re-entry to JPM bond index boosts Pound
The Pound strengthened against the dollar this week, appreciating to 15.71 from 15.73 at last week’s close, as Egypt was readmitted into JPMorgan’s benchmark Emerging Market Bond Index following the country’s removal in 2011.

Egypt’s re-entry will see the reintroduction of around $26bn of Egyptian government bonds to the index.

We expect this will strengthen the Pound further in coming weeks given potential inflows from passive funds that track JPMorgan’s index.

Terry Karanja
Treasury Associate, AZA

Kenya FX reserves plummet to record low to steady Shilling 
The Shilling weakened against the dollar this week, falling to 113.6/114.2 from 113.5/113.6, amid increased importer demand for FX to meet month-end payments. Subdued inflows from slower tea and coffee exports also weighed on the currency.

To stave off a steeper decline, Kenya’s central bank has drawn heavily on its FX reserves, causing the balance to plummet by a record from $8.72bn the previous week to a new low of $8.29bn.

While longer-term concerns abound, we expect the central bank support to help stabilise the Shilling over the coming week.

Oil megadeal to support Ugandan Shilling
The Shilling appreciated against the dollar this week, trading at 3492/3502 from 3505/3515 at last week’s close, due to inflows from commodity exporters and other investors.

Uganda’s $10bn deal with France’s TotalEnergies and the China National Offshore Oil Corporation (see top story) to help the landlocked country become a crude oil exporter is forecast to create as many as 160,000 jobs and provide a significant boost to economic growth.

Given the scale of investment, we expect the Shilling to remain stable in the near term.

Tanzania calls for sugar boost to ease import reliance
The Shilling weakened against the dollar this week, sliding to 2312 from around 2306 last week, due to increased end-of-month dollar demand from importers.

Tanzania’s government has been seeking to drum up investment into key sectors of the economy, with trade minister Ashatu Kijali urging Egyptian officials to invest in agriculture, energy, water and transportation infrastructure.

In particular, the minister called on investors to back industrial sugar factory developments in the country to reduce reliance on sugar imports. We expect the Shilling to stabilise in the coming days due to inflows from investors and exports, notably commodities including coffee and cashew nuts.

Note to journalists: please feel free to quote from this briefing for news reports and let us know any requests for further comment or interviews via the contact details at the end, or by reply to this email. AZA is Africa’s largest non-bank currency broker by trading volume at over $1 billion annually. See 

Issued by AZA. This Newsletter is produced as a service to our clients. It is prepared by our dealing professionals and is based on their understanding and interpretation of market events. AZA cannot be held responsible for any losses of whatever nature sustained as a result of action taken based on comments contained in this publication.

For more information, high-resolution charts or interviews, please contact:

Gavin Serkin
[email protected]
+44 20 3478 9710


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