IMF’s World Economic Outlook (WEO) April Report Revises Growth Forecasts Across Africa

Nigerian Naira (₦) 

The Nigerian naira gained from $/NGN 746 to $/NGN 743 over the last week as the cash scarcity continues to affect the country. A recent KPMG report noted that reduced investment in the private sector and the industrialisation slowdown might increase unemployment numbers this year. The slower pace of economic growth is attributed to oil sector challenges (Nairametrics). In other news, the International Monetary Fund (IMF) advised the central bank to maintain its recent monetary policy decisions to help address inflation. In the coming weeks, we expect the naira to return to its previous levels as FX demand grows.

Compiled by Ikenga Kalu 

Further reading:  

This Day Nigeria – Maintain Tight Monetary Policy to Check Inflation, IMF Tells CBN

Nairametrics – Nigeria’s unemployment rate estimated at 40.6% – KPMG report


Ghanaian Cedi (GH¢)

The cedi depreciated slightly this week, trading at 10.75 at the close of last week to 11.30 this week. This follows importer demand increasing for the U.S. dollar, pushing up the rate despite the market anticipating a positive outcome from the debt restructuring. This week, the IMF revised down Ghana’s 2023 growth forecast to 1.6%, from its earlier projection of 2.8% from its April 2023 World Economic Outlook (WEO) Report. We project sustained pressure on the cedi due to these market forces.

Compiled by Murega Mungai

Further reading: 
Myjoyonline- Cedi loses marginal grounds against dollar


South African Rand (R) 

The South African rand opened the new week at 18.2072 against the U.S. dollar, up from last week’s open of 17.7945. The trend continued as light trading on Monday pushed the rand further to 18.4975. The addition of extra trading volume on Tuesday (when most traders returned to work following the Easter weekend) did not affect the pricing much, continuing to trade in the 18.30-18.50 range most of Tuesday and Wednesday. Concerns around growth have re-emerged, along with the announcement of stage 5 load-shedding (rotational power cuts) this week.

As a result, looking ahead, we can expect the rand to continue trading in the 18.00-18.40 range against the U.S. dollar. Although the dollar index continues to trade around the 101-102 level (indicating a weakening dollar*), gains for the rand are largely capped due to concerns about overall economic performance. 

*As the Fed’s stance has changed to a more cautionary tone as of late, suggesting that the rate hiking cycle may be close to over.

Compiled by Alex Barmuta

Further reading: 

Business Tech – Eskom announces all-day stage 5 load shedding


Egyptian Pound (EGP)

The Egyptian pound traded in a range of 30.70 to 30.90 against the U.S. dollar last week. A brief spike in the rate was observed on 10 April to reach 31.13, its weakest level this year, before rebounding to 30.90. Annual headline inflation rose again this month, with the figure for March 2023 at 32.7%, up from 31.9% in February, partly due to increased food cost inflation. This continued pressure has prompted the central bank to pursue increases in interest rates. In its April 2023 World Economic Outlook (WEO) report, the IMF has revised their growth outlook downwards for Egypt to 3.7% for 2023 and 5.5% for 2024. While the global economy is expected to recover later in the year, turbulent conditions remain. Given these market forces, we anticipate that the Egyptian pound will continue to move closer to 31.00 against the dollar.

Compiled by Mitchell Diedrick

Further reading: 

ZAWYA – IMF trims Egypt’s economic growth forecast for FY 2022/23 to 3.7%
Reuters – Egypt’s headline inflation rate increased to 32.7% in March


Kenyan Shilling (KSh)

The Kenyan shilling traded at 133.60 at the close of last week, so its trading at 133.90 is a marginal change. Kenyan president William Ruto reiterated that the shilling would be trading at 120 against the U.S. dollar in the next few months following the government crafting a deal to ease demand for the dollar from the oil importers. This would help ease pressure on the shilling, considering that oil imports contribute significantly to the hard currency demand. In other news this week, the World Bank approved a $390 million loan to facilitate the Kenya Digital Economy Acceleration Project. Looking into the coming days, we project the shilling to trade at a stable level.

Compiled by Terry Karanja

Further reading:

Reuters – Kenyan shilling broadly stable in quiet trade
The Kenyan Wall Street – World Bank approves $390m financing for Kenya’s digital economy


Ugandan Shilling (USh)

On Wednesday, April 12th, the U.S. dollar/Ugandan shilling traded at 3,723.00, up 0.08% from the previous trading session. Its value has increased by 5.92% in the last year.  As expected, the Bank of Uganda kept its benchmark interest rate at 10% for the third time on April 6th, 2023, keeping borrowing costs at their highest level since 2019. The decision was made to help the domestic economy while keeping inflationary pressures at bay. Uganda’s inflation fell for the fifth consecutive month in March 2023 to 9%, the lowest level since August of last year, and is expected to fall further in the months ahead due to lower energy prices, improved global supply chains, exchange rate stability, and moderate demand pressures. In 2023, headline and core inflation are expected to average 6.5% and 5.6%, respectively. By the end of 2023, core inflation should have returned to the 5% target. Meanwhile, the country’s economic growth slowed to a low of 4.4% in the fourth quarter of 2022, and it is expected to be 5-5.6% for the fiscal year 2022/23. According to the bank, economic growth will remain below its long-term trend until the fiscal year 2025/26. We anticipate that the U.S. dollar/Ugandan shilling will be priced at around 3,775 levels by the end of this quarter.

Compiled by Yadhav Panday

Further reading: 

ZAWYA – Uganda central bank holds key lending rate


Tanzanian Shilling (TSh)

Once again, the Tanzanian shilling remained trading within a tight range against the U.S. dollar with a low of 2,341 and a high of 2,339. Bid and offer rates are currently at 2,336 and 2,346. With the Easter weekend granting a long weekend to the country, it has been a quiet week in Tanzania with respect to FX news. Dr Ulrick Mumburi, a senior economist at the Bank of Tanzania, dismissed the claims that Tanzania has a shortage of foreign reserves. He went on to affirm that Tanzania’s reserves are still comfortable to keep the economy steady regardless of the uneasiness hovering over the global economy. On Tuesday, the IMF revised their outlook on the global economic recovery downwards in its April 2023 World Economic Outlook (WEO) Report, with Tanzania’s growth for 2023 estimated at 5.2% and 6.2% for 2024. As we look to the week ahead for Tanzania, we expect that the Tanzanian shilling will continue its horizontal trend and trade between 2,338 and 2,341.

Compiled by Kristin Van Helsdingen

Further reading:

Africa Press – IMF revises down global economic growth forecasts

Africa Press – BoT: We’ve enough forex reserve, Isles inflation drops


West African CFA Franc Region (XOF) 

Senegal recorded an increase of almost 5% in its economic activity in February 2023 compared to the same period in 2022. This growth was mainly driven by the collection of taxes on goods and services, up to 23.8%, as well as the primary and tertiary sectors with respectively 3.8% and 3.7% growth. Compared to January 2023, economic activity is up 1% and once again supported at 31% by taxes on goods and services. Despite global socio economic crises, the Senegalese economy shows impressive resilience.

Compiled by Jean Cédric Nando KOUA

Further reading:

Sika Finance – Senegal: Economic activity increases by nearly 5% in February 2023


Central African CFA Franc Region (XAF)

The central bank has intensified its fight against inflation in the XAF region. After raising the key rate from 4.5% to 5% and reducing the amount injected into the economy from XAF 250 billion to XAF 50 billion, the central bank has suspended its liquidity injection operations dating back to February 2023. In addition, it has increased open market operations with attractive terms for commercial banks to use up the excess liquidity estimated at XAF 2,000 billion in January 2023. With inflation estimated at 6.4% in 2023, all these measures should help bring it closer to the community standard of 3%.

Compiled by Jean Cédric Nando KOUA

Further reading:

Sika Finance – Monetary policy: The BEAC suspends its weekly liquidity injections


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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