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Ghana hosts conversations with the U.S. and China

Nigerian Naira (₦)

The Naira slid marginally in the week from $/NGN 743 to 746 as severe cash shortages continued to affect cash-based businesses. To ease the shortage, the central bank has agreed to disburse cash to banks and required lenders to open to customers this weekend to make bills available. Once this cash injection can push the supply of cash in the country to previous levels, we should expect a gradual slide in the Naira against the U.S. dollar. In other news, the incoming administration of President-elect Bola Tinubu seems set on its plan to remove fuel subsidies. The outgoing president has suggested a public sector pay increase to help mitigate the cost hardship on citizens.


Further reading: 

Business Day Nigeria – Fuel subsidy removal: Buhari plots pay rise for civil servants 

PUNCH Nigeria – CBN instructs banks to open Saturdays, Sundays

Ghanaian Cedi (GH¢)

The Ghanaian Cedi gained sharply during the week, breaking the 12.00 level to trade at 11.80 (up from 12.30 last week). The gain was mainly attributed to the Bank of Ghana’s 150 basis point rate hike. The Bank of Ghana sold only $5.5 million on the spot market during the week and provided no support to the bulk oil distributing Companies. Looking ahead, the Cedi is expected to continue its positive trajectory to 11.50 levels.

In other news, the Ghanaian finance minister visited China to discuss a debt restructuring, with hopes of reaching an agreement in the near term. U.S. Vice President Kamala Harris also visited Ghana, which boosted hopes of further assistance from the IMF. 


South African Rand (R) 

The South African Rand opened the new week trading at 18.1311 against the U.S. dollar, continuing to gain back recent losses. It crossed below the 18.00 level at the time of writing following new market data. The risk-sensitive Rand has once more begun to show gains against the U.S. dollar as regulators worldwide work on mitigating bank risks.

From a local perspective, the Monetary Policy Committee announced a higher-than-expected rate hike of 50 basis points as policymakers seek to bring inflation back within the target range of 3-6%. February’s year-on-year figures showed an increase of 7% from 6.9% in January. This exceeded the 25 basis point hike that was expected.

Looking ahead, we expect the Rand to look undervalued and move towards the USD/ZAR support level of 17.60 and expect the 18.00 level to act as a strong resistance level (assuming current market trends remain constant and there is no shift in global risk appetite).


Further reading:

Business Tech – What to expect from the Reserve Bank’s interest rate decision this week

Egyptian Pound

The Egyptian pound traded at 30.90 to 30.84 against the U.S. dollar last week and has been around the 30.95 mark in midweek trading. Mounting pressure in the parallel market could signal a possible further devaluation of the Egyptian pound by the central bank, as reported by Reuters this week. An interest rate announcement is due on March 30, with the expectation for interest rates to increase to 18.25%. The rate was raised to 16.25% at the last meeting in February 2023. The move is aimed at curbing rising inflation and driving further foreign investment. In light of current economic conditions and mounting devaluation pressure, we forecast continued minor depreciation for the Egyptian pound against the U.S. dollar in the week ahead. 


Further reading: 

Reuters – Analysis: Pressure builds on Egypt to devalue currency further

Trading Economics – Egypt Interest Rate

Kenyan Shilling

The Kenya shilling traded at 132.19, slightly weaker than last week’s close of 131.4. This comes after the market witnessed a spike in activity as demand from importers who sought the U.S. dollar to cover their end-month import obligations heightened. Last week, the President of Kenya indicated that the Central Bank and commercial banks were working to remove price distortions. The regulator circulated a foreign exchange code intending to improve transparency and integrity in how the wholesale FX markets are conducted. 

On March 29th, the monetary policy committee increased the central bank rate by 75 basis points to 9.5%. This was due to sustained inflationary pressure, and we foresee an easing of pressure on the shilling in the near term. 


Further reading:

Bloomberg – Dollar Trading in Kenya Improves as Central Bank Changes Stance

Zawya – Kenyan shilling weakens, liquidity up as interbank market activity rises

Ugandan Shilling

On March 29, the U.S. dollar – Ugandan shilling traded at 3,785.00, up 0.26% from the previous trading session. In the last four weeks, USD UGX gained 1.75% and has increased by 5.58% over the year.

A coalition of international corporations, including Google and Microsoft, spoke out against the LGBTQ legislation passed by Uganda’s parliament, warning that it would harm the economy. According to the coalition, policies like this come with high economic costs. Looking ahead, we forecast that the exchange rate may decrease due to the legislation and the rising cost of living. 


Further reading: 

Reuters – Corporate giants say anti-LGBT law would hurt Uganda’s economy

Tanzanian Shilling

USD/TZS remained trading between 2,338 and 2,340 this past week, a very tight margin given the current climate of markets. Bid and offer rates for USD/TZS are currently 2,335 and 2,345. Nathan Belete, the World Bank’s Tanzania country director, praised the country for supporting the private sector. He also stated that if these efforts continue at the same pace, the annual GDP growth rate is expected to reach 6%, up from their current rate of 4%. As Tanzania strengthens ties with China, India, and the U.S., we expect trade volumes to rise. This is reflected in private sector sentiment, spurring a further boost in investor confidence. As a result, we expect USD/TZS to remain stable in the week ahead, trading between 2,337 and 2,340. 


Further reading:

Business Insider Africa – China’s investment in Tanzania reaches $1.8 billion after 10 years

Africa Press – World Bank hails Tanzania for promoting private sector, Tz-India trade in local currencies impresses business community, DSE witnesses remarkable weekly surge in stocks, Stanbic Bank to boost Tanzania-China trade volume

XOF Region

On March 20, the central bank increased its key rate to 3%. Previously at 2.5%, this increase is intended to strengthen its fight against inflation, which stood at 6% in January against a community standard of 3%. In addition to the rise in the key rate, the amount injected into the economy to refinance commercial banks has been reduced. Last week the amount injected amounted to 7.450 billion XOF against a request of 9.489 billion XOF, thus reinforcing the liquidity shortage in the region, which significantly impacts the securities market. After Côte d’Ivoire, Mali, and Niger, Togo also experienced shortages in the securities market. Out of the 40 billion XOF sought, only 8.58 billion XOF were obtained, i.e., 21.45%. This trend should push the states to find new financing sources for their budget deficit.


Further reading:

Sika Finance – UMOA : La BCEAO injecte 7 450 milliards FCFA au nouveau taux directeur de 3%, UMOA : Le marché des titres publics sous forte tension, UMOA : Le Togo contraint à son tour au manque de liquidité sur le marché des titres publics

XAF Region

Cameroon and Equatorial Guinea have decided to merge their cross-border gas assets and entrust the operation to Chevron. The site covers 679 km2 on the border between the two countries, and the operation should produce nearly 3.4 million tons per year, generating significant resources for both states. Gabon raised XAF 30 billion from the Arab Bank for Economic Development in Africa (ABEDA) This funding is intended to carry out rehabilitation projects, strengthen health structures, and deploy hospital pharmacies throughout the country. It will also contribute to the implementation of road infrastructure development projects. 


Further reading:

Sika Finance – Cameroun-Guinée Équatoriale : Accord pour l’exploitation conjointe du champ gazier de Yoyo-Yolanda, Gabon : 30 milliards FCFA pour réaliser des projets dans le secteur de la santé et des infrastructures


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.

AZA Finance



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