Africa Currencies Topline
- Nigeria: FX inflow euphoria loses steam as naira reverses gains.
- Ghana: Cocobod to raise an additional $400 million for this season.
- South Africa: 1 sentence summary here.
- Egypt: The pound remains stable despite decreased tourism in Egypt.
- Kenya: Fitch ratings warns against further slippage if exchange rate weakens further.
- Uganda: Slowdown in the private sector.
- XOF Region: Senegal — 30 hectares of land sold due to the construction of the “La Cité du Parc.”
- XAF Region: Nigerian oil to move across Cameroonian territory.
Nigerian Naira (₦)
Compiled by Ikenga Kalu
Last week saw a halt in the naira’s dramatic appreciation against the dollar as speculators looked to buy back cheap FX. This triggered a frenzied attempt to purchase FX at recent levels as the naira reverses gains and spirals toward previous lows.
Late last week, wires reported that the Nigerian central bank had begun clearing the backlog of overdue FX forward to the tune of $6.7bn and that three banks received full payment. Certain banks also confirmed that the central bank had begun clearing the outstanding retail FX obligations although no formal figure was announced. FX demand seems to have regained steam and we expect to see the naira lose even further value against the dollar in the coming days.
Further reading:
Punch — Naira gains as CBN pays banks $6.7bn forex backlog
Ghanaian Cedi (GH¢)
Compiled by Sakina Seidu
The Bank of Ghana is showing a USD/GHS rate of 11.5 away from current market levels of USD/GHS 11.9.
The highly anticipated $800 million cocoa syndicated loan expected to come in at the end of November, is experiencing some delays. Therefore, the government has requested a loan from some select institutions that trade in cocoa for a total of $400 million, of which half has already been secured.
We expect the Ghana cedi to slip with the increasing demand for U.S. dollars from the government, corporations and banks.
Further reading:
Bank of Ghana — Daily Interbank FX rate
Ghana web — Cedi sells at GH¢12.15 to $1, GH¢11.50 on BoG interbank
Reuters — Ghana borrows up to $200 mln from cocoa traders to plug funding gap
BNN Bloomberg — Ghana Taps Cocoa Traders for $400 Million as Bank Loans Delayed
South African Rand (R)
Compiled by Alex Barmuta
The South African rand gave back some of last week’s gains against the U.S. dollar opening at USD/ZAR 18.2671 before making a move back toward the 18.50 levels as of Wednesday afternoon.
The rand giving some of its gains back comes as no surprise, as data released from China on November 7 , showed a larger-than-expected drop in exports leading to the weakening of many emerging market currencies.
From a local perspective, rating agency Fitch expressed some concerns about South Africa’s ability to meet its fiscal targets, due to the ongoing power cuts, among other factors.
Looking ahead, we can expect the rand to continue trading according to global risk sentiment. To the upside, some resistance can be expected around the 18.80 levels, whereas support is likely to be found at 18.45-18.50.
Further reading:
Moneyweb — Rand slips on weaker Chinese data
Egyptian Pound (EGP)
Compiled by Mitchell Diedrick
The Egyptian pound continues to trade around USD/EGP 30.90 after some brief EGP strength was observed toward the end of last week where the pair traded at USD/EGP 30.64. There has been some dollar weakness across the board following a worse-than-expected jobs report out of the U.S. on Friday.
Over the week Egypt has continued to allow vulnerable patients requiring immediate medical attention to pass through the Rafah crossing which still remains the only entry and exit point from Gaza for civilians. An emergency aid convoy containing much-needed supplies has also been allowed to enter Gaza through this crossing. Tensions remain high in Gaza with continued calls for a ceasefire by many international organizations.
In the weeks ahead the Egyptian government will likely continue to perform a key mediation role in the Israel-Hamas conflict which is already impacting Egypt with reported decreases in tourism.
Further reading:
The Independent – How the Hamas-Israel conflict is ruining tourism in Egypt
Kenyan Shilling (KSh)
Compiled by Terry Karanja
The Kenyan shilling weakened to a record low between USD/KES 151.10/152.10 from last week’s levels between USD/KES 149.94/151. On October 7, 2023 ,Fitch ratings reported that they may downgrade the nation’s credit rating due to the increased risks to debt sustainability and the ability to settle payments on a $2 billion eurobond due in June 2024. The government remains in talks with external partners on financing, including the International Monetary Fund (IMF), World Bank, Trade and Development Bank and African Export-Import Bank. The Kenyan president’s chief economic adviser reported the IMF has agreed to increase Kenya’s lending program by $650 million. We expect pressure on the shilling as inflows from imports reduce. The imports have dropped down to 14% to Sh1.7 trillion from Sh1.97 trillion last year as the shilling weakens.
Further reading:
Reuters — IMF to increase Kenya programme by $650 mln, presidential adviser says
Fitch ratings — Higher Debt Servicing Costs to Weigh on Kenya’s Credit Profile
Ugandan Shilling (USh)
Compiled by Yadhav Panday
This Wednesday, November 8, USD/UGX traded at 3,755, unchanged from last Friday.. Looking ahead, we expect the USD/UGX to increase as the Stanbic Bank Uganda PMI fell to 52.4 in October 2023 from 52.9 the previous month.
Supplier delivery times increased due to heavy rainfall which caused delays. Higher construction material and fuel prices, as well as staff costs, drove up input costs. This resulted in a rise in selling prices for the seventh month in a row. Finally, business confidence in the outlook for customer demand and output over the next 12 months is high across sectors.
Further reading:
Ugbusiness — Private sector activity slowed in October, PMI shows
West African CFA Franc Region (XOF)
Compiled by Yashveer Singh.
The State of Senegal has sold 30 hectares of land from the former Léopold Sedar Senghor International Airport in Yoff for the construction of the Cité du Parc. The sale of the plots, which range from 175 to 600 square meters, has resulted in a recovery of 38 billion FCFA, according to Compagnie Générale Immobilière du Sahel’s (CGIS SA) Director General Abdou Khafor Touré.
The project, located in Dakar, will also include residential neighborhoods, business centers, and social infrastructure. Delivery of the plots is scheduled between December 2023 and February 2024.
Further reading:
Sikafinance — Senegal: The sale of 30 hectares of plots of the former airport brings in 71 billion FCFA
Central African CFA Franc Region (XAF)
Compiled by Yashveer Singh.
Niger’s transitional Prime Minister Ali Mahaman Lamine Zeine, started construction on a pipeline costing $2.3 billion linking Agadem oil fields to the port of Seme in Benin. The pipeline will allow Niger to export its oil to the international market, causing a loss of earnings for the deepwater port of Kribi in Cameroon’s southern region.
The oil is located in the eastern part of the country, close to the border with Chad. In 2013, a project agreement was signed between locals and Nigerian authorities, laying out conditions for the transit of Nigerian oil on Cameroonian territory. Cameroon is home to around 1,000 km of the 1,070 km pipeline linking Chad’s oil fields to the deepwater port of Kribi.
Further reading:
BusinessinCameroon — Boko Haram cost Cameroon billions of CFA francs in transit fees for Nigerien oil
