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Egypt’s Foreign Exchange Reserves Increase By $513M

Nigerian Naira (₦) 

Compiled by Ikenga Kalu

The naira depreciated steadily against the greenback falling from USD/NGN 758 to USD/NGN 766 over the previous week. The state oil company, NNPC Ltd., officially increased the price of gasoline at the pumps just days after Nigeria’s new President Bola Tinubu stated his intention to scrap fuel subsidies. This move sent prices across the country to as high as three times the initial guaranteed price of NGN 187 per liter under the auspices of the former fuel subsidy. The abrupt removal of the subsidy has led to immediate knock-on effects in both transport and food prices, increasing the load of hardship on citizens. In response to the subsidy removal, the National Labour Congress and Trade Union Congress, proposed a nationwide strike to protest the sudden fuel increase and its ramifications on the welfare of Nigerians. The planned protest was, however reversed after the NLC and TUC came to an agreement with the government to allow for further consultations without bringing business activities to a halt. We expect further naira depreciation in the coming weeks as higher FX demand and inflationary pressures weigh on the local unit. 

Further reading:  

Business Insider — Nigeria’s fuel subsidy removal sparks nationwide price hikes 

Vanguard — Why we suspended planned nationwide strike

Premium Times — Food prices, transport fares increase across Nigeria as fuel subsidy removal bites harder 

Ghanaian Cedi (GH¢)

Compiled by Murega Mungai

The Ghanaian Cedi traded from 11.24 USD/GHS to 11.29 USD/GHS, marginally weaker in this week’s trading session compared to last week’s close. This comes with the sustained demand for forex in the market. The International Monetary Fund, on the other hand, maintained Ghana projected GDP growth at 1.6% this year due to the overall weak economic stability as well as the external shocks impacting the local economy. On the flipside, the IMF projects slightly higher projected GDP growth for 2024 at 2.9% as the country undertakes the Fund’s support programme, which is expected to ease the country’s distress. In the coming days, we project the cedi to trade between 11.60 USD/GHS and 11.80 USD/GHS.

Further reading:  

Myjoyonline — World Bank maintains 1.6% growth rate for Ghana in 2023

South African Rand (R) 

Compiled by Yashveer Singh

The South African rand ended last week on the backfoot, closing at USD/ZAR 19.4952. The new week provided some relief, as the rand traded around 19.0280 levels against the U.S. dollar at the time of writing.

The South African Reserve Bank (SARB) raised its policy rate again on May 25, 2023, to a 14-year high of 8.25%, in an effort to rein in inflation expectations and support the currency. South Africa’s annual inflation rate fell to 6.8% in April 2023, below market forecasts of 7%. However, still above the upper limit of the SARB’s target range of 3% –6%.

The JSE FTSE All Share index closed 0.3% up on Tuesday, boosted by financials and resource-linked sectors. Investors continued to gauge the outlook for interest rates and assessed economic data from major economies. South Africa’s economy expanded by 0.4% quarter-on-quarter in the first quarter of 2023, but economists warned of major growth obstacles for the remainder of the year.

Further reading:  

Reuters — South African rand strengthens despite lackluster PMI

Egyptian Pound (EGP)

Compiled by Mitchell Diedrick

The Egyptian pound remains at levels of 30.90 USD/EGP and closed off last week at 30.896 USD/EGP.

Positive news of a rise in foreign exchange reserves was announced by the Central Bank of Egypt this week. Foreign exchange reserves increased by $513 million in May 2023 to $26.686 billion from $26.173 billion in April 2023. The economy has been pressed for foreign currency in recent months, and an increase in reserves will surely provide some interim relief. The news has had little impact on the exchange rate against the dollar, which is likely to come into effect once greater flexibility of the pound is allowed.

The S&P Global Purchasing Managers’ Index improved to 47.8 for May 2023 and came in marginally lower than the consensus of 48. It is worth noting that this is still below the 50 level, which would be indicative of growth in activity. A 30th straight contraction of non-oil private sector activity for May 2023 is a likely contributor to this and continues to be impacted by high inflation. 

In the week ahead, we expect the Egyptian pound to remain around 30.90 against the dollar.

Further reading:  

Reuters – Egypt non-oil activity contracts for 30th month as prices rise
ZAWYA – $513mln increase in Egypt’s foreign-exchange reserves to $26.686bln in May 2023

Kenyan Shilling (KSh)

Compiled by Terry Karanja

The Kenyan shilling continues to drop to new record lows and has remained under pressure due to persistent dollar demand from the energy and manufacturing sectors. The shilling is currently trading at the levels of 138.80-139.16 from last week’s levels of 138.45/80. The overall inflation increased marginally to 8% in May 2023 from 7.9% in April. Inflation was mainly driven by food which increased to 10.2% from 10.1% in April, and energy prices, which increased to 13.6% from 13.2% in April. According to the World Bank, the economy is expected to grow at a slightly faster pace this year as the agriculture sector recovers. The usable forex reserves have remained adequate at USD 6,512 million, which is 3.62 months of import cover. In the week ahead, we foresee continued pressure on the shilling as importers spend more to secure dollars to pay suppliers.

Further reading:  

Reuters — Kenya economic growth to edge up this year, World Bank says
The standard — More pain as food prices expected to increase further- CBK report

Ugandan Shilling (USh)

Compiled by Yadhav Panday

USD/UGX was trading at 3,732.00 on Tuesday, June 6, 2023, weakening 0.05% from last Friday. The Stanbic Bank Uganda PMI increased to 57.4 in May 2023, up from 55.4 the previous month, indicating a robust increase in business activity. Economic stability and a surge in new orders across various sectors helped output growth extend its upward trend. Furthermore, employment increased for the second month in a row as a result of higher new orders. Input purchasing increased for the seventh month in a row while delivery times continued to improve.

Looking ahead, we expect USD/UGX to weaken this week as input costs continue to rise, owing to increases in construction material, electricity, fuel, stationery, and staff costs. Selling prices increased for the second month in a row, primarily in agriculture, industry, and services.

Further reading:  

Stanbic bank — June press release

Tanzanian Shilling (TSh)

Compiled by Kristin Van Helsdingen

The Tanzanian shilling has continued weakening against the U.S. dollar and ended off last week at its weakest level since 2017 at 2,368. This week so far, USD/TZS has continued this upward trend and is currently trading at 2,370 at the time of writing.

On Saturday, June 3, 2023, Tanzania received its first freight aircraft dedicated solely to trading purposes, which will assist the country in its goal to drive an increase in imports and exports. The government has made efforts toward setting up training centers to educate and encourage the country to become one of the leaders in the meat export industry. Tanzania’s focus on trade has already been evident as coffee exports were at a record high, bringing in a total of $231 million in sales during the 2022/23 season.

As we look ahead, we expect the Tanzanian shilling to continue weakening against hard currencies as markets continue having a risk off sentiment. USD/TZS is likely to weaken beyond the 2,372 level.

Further reading:  

Simple Flying – Air Tanzania Receives Africa’s 1st Brand-New Boeing 767 Freighter

IPPmedia – Tanzania to become leading meat exporter

THE CITIZEN – Tanzania coffee exports earnings hit $230 million record

West African CFA Franc Region (XOF)

Compiled by Jean Cédric Nando KOUA 

Over the last seven months, inflation has fallen for the fifth time, settling at 4.6% in April 2023 against 5.7% in March 2023.

This decline is mainly due to the central bank’s rigid monetary policy over the last few months but also to a deceleration in food (5.1%), transport (7.5%) and housing (5%) prices.

Measures taken to counter inflation are showing encouraging results and appear to be heading toward the economic union’s 3% target. 

Further reading:  

Sika Finance – WAEMU: Inflation slows down again to 4.6% in April 2023

Central African CFA Franc Region (XAF)

Compiled by Jean Cédric Nando KOUA 

Out of the XAF 200 billion budgeted, Cameroon’s treasury will issue XAF 150 billion this month of June 2023. The bonds are scheduled to be issued on maturities of three to four years, remunerated at 5.80% – 6% and six to eight years, remunerated at 6.75% – 7.25%.

This fundraising should enable Cameroon to finance the development projects planned in the 2023 budget. 

Further reading:  

Sika finance – CEMAC: Cameroon will issue its very first variable rate bond loan


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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