Bank of Ghana governor reports better economic outlook despite weak cedi

Nigerian Naira (₦) 

Compiled by Ikenga Kalu

Olayemi Cardoso was ushered in as the new governor of the Central Bank of Nigeria (CBN) on Tuesday, September 26, 2023. In his address to the media, he highlighted the current issues facing the Nigerian naira and briefly highlighted what would need to be done to tackle the problem as the naira reached the USD/NGN 1,000 level in the parallel market.
He understands that the naira is under pressure (especially in the parallel market) due to large demand for foreign currency, which is unable to be offset due to weak foreign inflows and weaker oil exports.

He also commented that the forex backlog in the official market is also contributing to the issue and needs to be addressed as soon as possible.

Further reading:  

BusinessDay – Cardoso proposes CBN ‘reset’ as naira plunges to 1,000/$

Ghanaian Cedi (GH¢)

Compiled by Sakina Seidu

The cedi continued to lose its ground, with a current position of USD/GHS 11.62.

Conversely, Ernest Addison, governor of the Bank of Ghana, at a press conference on Monday, September 25, 2023, indicated an improvement in the economic outlook of the country. The macroeconomic indicators he used to justify this statement included a stable exchange rate, dropping inflation, and continuation of the monetary policy rate. These improvements, he has credited to the $3 billion International Monetary Fund (IMF) programme Ghana is currently adopting.

The trend of GHS losing to USD is likely to continue with increasing demand for forex not matched by adequate supply.

Further reading:  

Ghana web — Cedi sells at GH¢11.60 to $1 as of September 26

Ghana web — Economic conditions improving

South African Rand (R) 

Compiled by Alex Barmuta

The South African rand closed last week at levels of USD/ZAR 18.75. In midweek trading, it surpassed the 19.00 level to trade at USD/ZAR 19.09 in the Wednesday morning session.

The rand’s move back above the 19.00 level against the U.S. dollar can be largely attributed to dollar strength rather than ZAR weakness as 10-year U.S treasury yields hit a 16-year high at 4.54%. The U.S. dollar index also went above the 106 level.

From a local perspective, investors will be focused on the release of data relating to producer price inflation, the trade balance, and budget figures (Thursday and Friday),  which will give some clues as to how the economy is doing.

Looking ahead, we can expect the rand to continue trading above the 19.00 handle against the dollar.

Further reading:  

NEWS24 – ‘The dollar is just a steamroller.’ Rand back at R19/$

Egyptian Pound (EGP)

Compiled by Mitchell Diedrick

The Egyptian pound continued to remain range-bound around the USD/EGP 30.90 level over the past week. 

A presidential election is set for Egypt toward the end of the year; however, it is unlikely that there will be another currency devaluation before this. Pressure continues to mount for the currency to be devalued and become more flexible, which was outlined as a requirement by the International Monetary Fund (IMF) toward the end of last year in order to unlock further funding. Exchange rates in the parallel market also seem to be compounding the pressure for further devaluation of the pound amidst a continued shortage of dollars in the local market and persistently high inflation.

We should have a clearer picture this week of Egypt’s foreign exchange reserves and if the situation is improving. In the absence of any shocks, we expect the pound to remain stable at USD/EGP 30.90 levels.

Further reading:  

ZAWYA – Egypt devaluation delay may only add to post-election pain

Kenyan Shilling (KSh)

Compiled by Terry Karanja

The Kenyan shilling weakened this week and is trading between USD/KES 147.69 and 148.01 from the levels of 147.35 the week earlier. The depreciation of the dollar has resulted from lower foreign exchange inflows and higher global interest rates. The Forex inflows in Kenya include diaspora remittances, exports, tourism, foreign direct investment, and foreign loan disbursements to stabilize the currency.

Earlier this week, the U.S., via the Washington DC-based Millennium Challenge Corporation and the Kenyan government, signed a $60 Million Connectivity Grant, which is designed to improve urban connectivity and promote economic growth.

To stabilize the exchange rate volatility, Kenya has paid $238.8 million to Gulf companies under the government-to-government import credit scheme, which would reduce dollar demand from energy sector firms. We might see the shilling weaken further in the coming days as we approach the end of the month, where demand for dollars might increase.

Further reading:  

Techcabal — Kenya signs $60 million deal with the US
The EastAfrican — Kenya pays $238m to gulf companies under G-to-G arrangement

Ugandan Shilling (USh)

Compiled by Yadhav Panday

USD/UGX was trading at 3,750.00 on Wednesday, September 27, 2023, down 0.32% from last Friday. Looking ahead, we expect USD/UGX to decrease because Uganda’s economy grew by 6.8% year on year in the second quarter of 2023, up from a downwardly revised 2.4% increase in the previous three-month period. 

The services sector (8.8% versus 1.4% in Q1), particularly arts, entertainment, and recreation (40.9% versus 30.4%); accommodation and food service (28.9% versus 17.4%); and information and communication (20.9% versus 12.1%), drove the 10th consecutive quarter of economic expansion. In addition, the industrial sector gained steam (7% versus 0.2%), owing to a strong rebound in mining and quarrying (69.6% versus -26.0%).

Further reading:  

UGbusiness — Economy surges in second quarter

Tanzanian Shilling (TSh)

Compiled by Kristin Van Helsdingen

The Tanzanian shilling strengthened to USD/TZS 2,493 on Thursday, but on Friday, it weakened to USD/TZS 2,510. The currency pair is currently back trading at its usual level at USD/TZS 2,505.

 The Bank of Tanzania (BoT) has started to purchase large volumes of gold as part of its strategy to increase the levels of foreign reserves. This week, the BoT was said to have purchased 418 kilograms of gold. Additionally, Tanzania has continued to welcome Chinese investment to assist them in expanding their industrial footprint. 

With no major economic news being released from Tanzania in the week ahead, USD/TZS is expected to continue to trade around the 2,505 level.

 Further reading:  

THE CITIZEN – BoT buys 418 kilogrammes of gold in new move to bolster foreign reserves

XINHUANET – Tanzania welcomes more Chinese investors to support industrialization drive

West African CFA Franc Region (XOF) 

Compiled by Yashveer Singh

In the first half of 2023, Dakar Blaise Diagne International Airport (AIBD) in Senegal experienced significant growth in passenger and freight traffic. Passenger numbers increased by 18% compared to the same period in 2022, reaching 1,393,093 passengers, surpassing the 2019 levels by 19%. Freight transport also saw an uptick, with 19,696 tonnes transported, marking a 5% increase from 2022 and exceeding pre-crisis levels by 3%. 

The National Agency for Civil Aviation and Meteorology (ANACIM) reported a 7% increase in aircraft movements, with 13,725 flights recorded in the first half of 2023 compared to 12,833 flights in 2022. Senegalese airlines such as Air Sénégal, Transair, and Arc en Ciel maintained their market share, accounting for 25% of passenger traffic, 15% of freight, and over 33% of movements, with Air Senegal playing a significant role in this share.

Further reading:  

Sikafinance — Senegal: AIBD traffic up 18% in first half of 2023

Central African CFA Franc Region (XAF)

Compiled by Yashveer Singh 

An Economic and Monetary Community of Central Africa (CEMAC) delegation will assess Cameroon’s tax policy from September 25 to October 6, 2023, to determine its compliance with sub-regional standards as part of multilateral surveillance efforts. This involves coordinating national economic policies among CEMAC member states. During the assessment, CEMAC representatives will engage with government officials, employers, and financial partners, discussing budgetary policy and progress in implementing structural reforms initiated under the Economic and Financial Program with the IMF in July 2021.

The assessment will also cover ongoing reforms addressing public debt sustainability, actions for the 2024-2026 Triennial Convergence Program, implementation of CEMAC Heads of State Summit resolutions, and recommendations from public investment management evaluations. Additionally, the visit will evaluate measures against inflation, protection of vulnerable population purchasing power, import-substitution policies, state-owned enterprise viability, and financial reforms related to CEMAC’s harmonized framework. This visit concludes a sub-regional tour that started in Equatorial Guinea on August 7, 2023.

Further reading:  

Business in Cameroon — Cemac deploys mission to assess Cameroon’s fiscal policy


Issued by AZA Finance, 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 Finance cannot be held responsible for any losses of whatever nature sustained as a result of action taken based on comments contained in this publication.

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