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Ghanaian cedi continues three-week rally against the dollar

Nigerian Naira (₦) 

Compiled by Ikenga Kalu

The naira exhibited some volatility in the past week, although there was a net appreciation from USD/NGN 875 to USD/NGN 872. The Central Bank of Nigeria raised the benchmark interest rate from 18.5% to 18.75% at the latest monetary policy committee meeting to combat rising inflation caused by both the removal of the fuel subsidy and the convergence of the exchange rate windows. The acting governor of the central bank also hinted that it had started to intervene in the FX market in a bid to boost liquidity amid the existing naira volatility. We saw some selloff of U.S. dollars after the naira touched the USD/NGN 875 handle, which may represent the latest resistance level. We expect another retest and possible break past this level in the coming week. 

Further reading:  

Nairametrics – CBN increases interest rate to 18.75% in first MPC session since Emefiele’s suspension

Ghanaian Cedi (GH¢)

Compiled by Sakina Seidu

The cedi continued its three-week rally against the dollar, trending downward on the 11.60 spectrum. 

At the just-ended monetary policy committee (MPC) meeting on July 21, 2023, the governor’s statement highlighted economic factors that informed the decision to increase the monetary policy rate (MPR) by 50 basis points to 30%. These highlights from the deliberation included the MPR increase in a quest to tighten access to the cedi, through the increase of lending rates to commercial banks and contrarily attracting foreign investors with the promise of higher interest rates. 

Another noteworthy development was the sign of recovery for the composite index of economic activity (CIEA), a direct indicator of an improvement in the volume of business activity in the country. The banking sector also showed an impressive change after the effects suffered following the domestic debt exchange program (DDEP). 

We expect the cedi to continue to stabilize over the course of the week as Ghanaians anticipate the details of the mid-year budget review.

Further reading:  

Bank of Ghana — Monetary Policy Committee Press Release

Modern Ghana — BoG increases Policy Rate to 30%

Peace FM Online — Economy Expected To Show Positive Stabilization Signs

Citi Business News — Presentation of mid-year budget review pushed to Monday Jul 31, 2023

South African Rand (R) 

Compiled by Alex Barmuta

The USD/ZAR closed at 17.7341 on Friday, July 21, 2023, before continuing to test lower levels. By  Wednesday afternoon, it was trading around the 17.70 level.

With no notable changes from a local perspective, a global increase in risk appetite led to some gains for the rand. This shift in investor sentiment was largely driven by a lower expectation for rate hikes from developed economies due to weaker than previously anticipated economic data, thus leading to an increase in investor interest in emerging markets. Another boost came from China, as it pledged to support its own economy to accelerate growth, this, in turn, also led to some gains for global risk assets who reap the benefits of positive chinese market news.

Looking ahead, we can expect the rand to continue to trade under 18 against the U.S. dollar. A move below the 17.50 level is possible if the U.S. Federal Reserve’s interest rate decision later today favours emerging markets.

Further reading:  

iAfrica — South African Rand Strengthens as Global Rate Hike Expectations Ease

Egyptian Pound (EGP)

Compiled by Mitchell Diedrick

The Egyptian pound closed out the week at USD/EGP 30.75 on July 21, 2023. The new week started with the pound losing some ground, heading back toward 30.85 on Wednesday.

Egypt’s biggest state banks — Banque Misr and the National Bank of Egypt (NBE) — are offering 9% annually on three-year dollar-denominated certificates in an attempt to bring dollars into the financial system and ease the economic crunch.

We can expect the Egyptian pound to continue trading at elevated levels in the coming week due to the current economic situation inside the country.

Further reading:  

Devdiscourse — Egypt’s top state banks offer dollar-deposit certificates to ease hard currency crunch\

Kenyan Shilling (KSh)

Compiled by Terry Karanja

The Kenyan shilling is trading at USD/KES 142.10/142.26, which is a drop from 141.50/142.23 the previous week. This has led the country to increased costs of servicing its dollar-denominated debts and also exposed it to a higher import cost. Fitch downgraded Kenya’s creditworthiness by moving the long-term foreign currency issuer default rating to negative from stable. Fitch put it at “B”, meaning the country stands at a high risk of loan defaults. The shilling may continue to be under pressure in the coming week with high dollar demand from oil importers and the manufacturing sectors.

Further reading:  

The Star — Poor Fitch rating to muddy Kenya’s fifth Eurobond bid

Ugandan Shilling (USh)

Compiled by Yashveer Singh

This Wednesday, July 26, 2023, USD/UGX traded at 3,630, strengthening by 0.28% compared to the previous trading session. Over the past four weeks leading up to the current date, the USD/UGX exchange rate has gained 1.16%. 

Russia’s recent decision to pull out of an agreement which allowed the export of Ukrainian agricultural goods via a safe channel through the Black Sea amid the continuing war is already reverberating far from the front lines of fighting in Ukraine. For years, East African countries such as Uganda, rattled by global climate change, have relied on Ukrainian grain exports for sustenance. Now, an end to the agreement could lead to rising consumer prices and further strain farmers and cash-strapped aid organizations already struggling to respond to challenges like drought.

Looking ahead, we project the USD/UGX exchange rate to fall to 3,666.536.

Further reading:  

Aljazeera — Concern mounts in East Africa over halted Black Sea grain deal

Tanzanian Shilling (TSh)

Compiled by Kristin Van Helsdingen

The Tanzanian shilling remained stable against the U.S. dollar this past week as it traded around USD/TZS 2445. The shilling strengthened slightly over the weekend, where it traded at USD/TZS 2,443.

The first graphite mine in Tanzania is on track to start operating before the end of this year. With top-quality graphite being sourced from the ground, a big turn for the mining industry is expected in the new year.

As Tanzania continues to gain investor confidence under President Samia Suluhu Hassan, we can expect the shilling to remain stable. In the week ahead, we can foresee USD/TZS to continue trading around the 2,445 level.

Further reading:  

MINING REVIEW AFRICA – EXCLUSIVE: Lindi Jumbo – Tanzania’s first graphite mine on track to production

The Standard – Sibling rivalry: Is Kenya losing investment deals to Tanzania?

West African CFA Franc Region (XOF)

Compiled by Jean Cédric Nando KOUA 

Senegal has successfully raised XOF 33 billion on the securities market.

Investors responded favourably to the Senegalese securities issue by offering up to XOF 42.75 billion against an initial amount of XOF 30 billion sought. The Senegalese treasury finally retained XOF 32.96 billion and offered investors a weighted average yield of 7.34% for the three-year securities and 7.24% for the five-year bonds. 

Further reading:  

Sika finance — UMOA: Senegal raises 33 billion FCFA on the public securities market

Central African CFA Franc Region (XAF)

Compiled by Jean Cédric Nando KOUA

Cameroon collected XAF 487 billion in customs revenue in the first half of 2023.

All duties, taxes and levies on taxpayers on border activities generated nearly XAF 487 billion in customs revenue in the first half of 2023. This amount is well above the target set at XAF 470.4 billion, which represents an achievement rate of 103.4% and a progress rate of 19% compared to the same period in 2022.

Despite the good performance achieved by Cameroonian customs, many efforts still must be made to reach the annual target of XAF 1,004.7 billion budgeted. 

Further reading:  

Sika finance — Cameroon: 487 billion FCFA of customs revenue collected in the 1st half of 2023


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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