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‘Risk-off’ wave weakens Rand
The Rand came under pressure this week amid a wave of ‘risk-off’ sentiment, with global coronavirus cases continuing to rise and tensions between the US and China increasing as Trump banned TikTok and WeChat. South Africa’s manufacturing output fell 16.3% year on year in June, after shrinking by 32.4% in May. The currency weakened from a high of 17.38 last week to as low as 17.63 to the dollar this week. We foresee sustained pressure on the Rand in the coming days.
Naira stable amid oil recovery
The Naira traded in a stable range, maintaining levels of around 475 to the dollar in the parallel market, as oil — Nigeria’s biggest FX earner — hit the highest levels since March. As uncertainty persists since the central bank’s unification call, we see the currency sustaining similar levels in the coming days.
Uganda rate freeze supports Shilling
The Ugandan Shilling strengthened from a low of 3700 to as high as 3675 against the dollar this week amid relief from import obligations that had weighed on the currency and support from the monetary policy committee holding interest rates at 7%. The central bank cut its rates twice earlier in the year as part of stimulus measures to protect the economy against coronavirus impact. We foresee the currency trading within levels of 3670 to 3690 to the dollar in the coming days.
Rising imports weaken Kenyan Shilling
The Kenyan shilling lost ground to the dollar, moving from 107.90 last week to a low of 108.45 this week, amid growing demand from importers with the nation’s coronavirus lockdown easing. Business activities have increasingly been piling pressure on the local currency given that Kenya is a net importer of vital goods such as fuel and industrial raw materials. Meanwhile, key foreign exchange earners, such as tourism, tea, horticulture, and diaspora remittances, remain disrupted. We foresee further pressure on the shilling in the coming days.
Fewer import obligations spur Tanzanian Shilling
The Tanzanian shilling strengthened slightly to 2320/2330 (2325) to the dollar this week from 2320.69/2330.69 (2325.69) a week ago as a result of eased pressure on the local currency from traders with import obligations. Inflows from exports from the agricultural and tourism sectors continue to be subdued given travel restrictions and supply disruptions. We foresee stability around these levels in the coming days.
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