Aza finance fx insights: Africa Currencies Topline: Ghana’s Inflation eases for the month of September.


Nigeria: No end in sight for the depreciating naira.

Ghana: Ghana’s Inflation eases for the month of September.

South Africa: South African rand moves under the 19.00 level against the U.S. dollar.

Egypt: Central bank reports a marginal decline in annual core inflation.

Kenya: Sustained pressure on the Kenyan shilling pushes Kenya down 1 spot in the Absa Africa Financial Markets Index.

Uganda: Safety Concerns Suspend Uganda Oil Field Development.

Tanzania: Tanzania continues to strengthen relations with India.

XOF Region: Senegal: 99 million euros approved in favor of Senegal for the financing of two key projects.

XAF Region: Cameroon: Inflation surges despite measures put in place by the central bank.

Nigerian Naira (₦)

Compiled by Ikenga Kalu

This week, the Naira lost further ground against the U.S. dollar and trended towards USD/NGN 1030 in the parallel market.

The country continues to battle a foreign currency shortage that is even impacting fuel importers. Nigeria is largely reliant on petrol imports despite being a large producer of oil as it has limited onshore refinery options. It has been widely reported that Nigeria’s national oil firm NNPC Ltd., is now the sole importer of fuel as private importers are unable to support the demand and pay for imports due to a shortage of foreign currency.

The rate is likely to depreciate further in the coming week as FX demand continues to increase.

Further reading: 

Reuters – Nigeria’s NNPC now sole petrol importer as forex shortages hit rivals

Ghanaian Cedi (GH¢)

Compiled by Sakina Seidu

The Ghanaian cedi continued to drop to an average rate of USD/GHS 11.95, with indications of crossing the USD/GHS 12.00 barrier soon.

A recorded Consumer Price Inflation of 38.10% shows easing costs of general consumer goods for Ghana from a rate of 40.10% in August. A major driver of Inflation in Ghana, food, saw a 5% decline to a rate of 49.40% for the month of September.

With demand still rising with no hope of easing, the U.S. dollar is expected to keep gaining against the cedi in the short term.

Further reading: 

Ghana web — Cedi sells at GH¢11.95 to $1, GH¢11.26 on BoG interbank as of October 11

Ghana statistical service — Ghana Consumer Price Index (CPI) and Inflation

South African Rand (R)

Compiled by Alex Barmuta

The USD/ZAR closed trading last week at 19.2797. As of Wednesday afternoon, the South African rand has moved under the 19 handle against the U.S. dollar testing the 18.80 support level.

The rand’s rather surprising gains against the dollar this week, are largely driven by a weaker dollar, rather than a surge of rand demand. The Federal Open Market Committee (FOMC) minutes on Wednesday evening could fuel more moves,  depending on the general tone, and how it is interpreted by investors.

Looking ahead, we can expect the rand to be volatile, possibly trading in the 18.60-19.00 range.

Further reading: 

DailyFX — USD/ZAR Price Forecast: US Data will Test Short Term Direction

Egyptian Pound (EGP)

Compiled by Mitchell Diedrick

The Egyptian pound appreciated against the U.S. dollar toward the end of last week to trade at levels of USD/EGP 30.68 before depreciating once again to USD/EGP 30.90 this week.

Inflation data released by the Egyptian Central Bank revealed that annual core inflation had declined marginally to 39.7% in September 2023 from 40.4% in August 2023. In comparison, annual inflation as a whole — including some of the more volatile items that are stripped out of core inflation — rose to 38% from 37.8% in August 2023.

This week the Egyptian pound is likely to remain at these levels against the U.S. dollar in the absence of any intervention or external shocks.

Further reading: 

Egypt today – Monthly urban inflation hikes to 38%, with annual inflation rate witnessing slight decline

Kenyan Shilling (KSh)

Compiled by Terry Karanja

The Kenyan shilling closed trading last week at USD/KES 148.68 as it continues to depreciate against the U.S. dollar.

The rapid and consistent depreciation of the shilling (over 20% year-to-date) means that Kenya has fallen from sixth to the seventh spot in the Absa Africa Financial Markets Index. Further to this, trade data released by the Central Bank of Kenya (CBK) shows that imports dropped by just under 14% so far in 2023. This has prompted a capital control proposal where firms holding an “excessive” amount of dollars could face fines of up to KES 10,000,000 (approximately USD 67,000).

Looking ahead, we can expect the shilling to remain under pressure. A move beyond the USD/KES 149 level is possible in the coming week.

Further reading: 

Business Insider Africa — Kenyan MP proposes $67,000 fine for firms accused of hoarding dollars


Ugandan Shilling (USh)

Compiled by Yadhav Panday

On Wednesday, October 11, 2023, USD/UGX was trading at 3,745.00, up 0.13% from the previous trading session.

In the coming days, we expect the USD/UGX to rise due to work stoppages caused by violations of safety regulations at Uganda’s $2 billion Kingfisher oil field. The 40,000 barrels-per-day oil field was scheduled to begin production in early 2025, but the regulator said work will be halted until an investigation into a fatal accident on October 6, 2023, when a worker was crushed by a truck is completed.

Work at the oil field near Uganda’s western border with the Democratic Republic of the Congo has been halted for the past two days following the incident.

Further reading: 

Marketscreener — Safety Concerns Suspend Uganda Oil Field Development

Tanzanian Shilling (TSh)

Compiled by Kristin Van Helsdingen

The Tanzanian shilling continues to be closely monitored by the Bank of Tanzania, resulting in the Tanzanian shilling trading closely with the U.S. dollar. USDT/TZS has remained between 2,505 and 2,510 and is currently trading at 2,510.

President Samia Suhulu Hassan has contributed toward generating revenue through tourism through her film in 2022 called Tanzania: Royal Tour. This week, the National Bureau of Statistics (NBS) released data indicating that tourism increased by 25.7%, from 900,182 visitors in 2022 to 1,131,286 this year.

Tanzania has continued to strengthen its ties with India, and in addition, President Hassan appealed to Indian investors to look to Tanzania. With ongoing efforts to bring in foreign investments and strengthen relations to promote trade, we can expect the shilling to remain relatively stable in the week ahead, moving between USD/TZS 2,505 and 2,512.

Further reading: 

AFRICA PRESS – Tanzania records 24pc increase in tourist arrivals

AFRICA PRESS – Tanzania India elevate ties

AFRICA PRESS – President Samia lures Indian investors

West African CFA Franc Region (XOF)

Compiled by Yashveer Singh

The Economic Community of West African States (ECOWAS) Bank for Investment and Development (EBID) has approved 65 billion FCFA (99 million euros) in funding for Senegal during its 85th board of directors meeting in Lomé, Togo. This funding is allocated for two significant projects aimed at boosting the country’s socio-economic development and indirectly benefiting the ECOWAS region by promoting increased commercial activities across various sectors.

The first project involves 50 billion FCFA for infrastructure development in the urban commune of Diamniadio, located about 30 kilometers from Dakar. This new city is intended to host key industries, logistics services, and business activities, making it essential to provide state-of-the-art infrastructure and technology systems to facilitate international business activities in the modern context.

The second project, allocated 15 billion FCFA, focuses on the Tivaouane-Mékhé section within the Dakar-Tivaouane-Saint Louis highway construction program. This ambitious 200 km highway project aims to connect the major coastal cities of Senegal. The goal is to drive economic development in the project area, particularly in agriculture, mining, fishing, and tourism, while also stimulating regional trade within ECOWAS and North Africa.

Further reading: 

Sikafinance Senegal: 65 billion FCFA from the EBID for infrastructure development and trade

Central African CFA Franc Region (XAF)

Compiled by Yashveer Singh

In August 2023, despite efforts by the Bank of Central African States (BEAC), to control inflation in Cameroon, the inflation rate exceeded 7% in nine out of 10 regional capitals, with peaks of 10.3%, 8.3%, and 8.2% in Bertoua, Bafoussam, and Ngaoundéré, respectively. The National Statistics Institute (INS) attributed this surge in prices to a significant increase in food products (+13.3%) and transport (+10.4%). BEAC had been taking measures such as raising key interest rates, suspending liquidity injections, and increasing liquidity recovery operations with banks since 2022, but these efforts seem insufficient.

BEAC also noted that only 20% of the inflation is of monetary origin, meaning the measures taken by the central bank have no impact on the remaining 80% of inflation.

Further reading: 

Business in Cameroon Inflation surpasses 7% in 9 regional capitals in August 2023, despite Beac’s efforts

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