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Inflation In West Africa Continues Steady Decline, Egypt’s Urban Inflation At All-Time High

Nigerian Naira (₦) 

Compiled by Ikenga Kalu

The naira continued its decline against the US dollar, falling from USD/NGN 794 recorded last week to USD/NGN 815 this week as demand from the Central Bank-managed windows reportedly finds its way into the parallel market. President Bola Tinbu has postponed the implementation of some tax changes proposed by the preceding government in a bid to ease the strain of rising costs and falling margins on businesses. These tax changes would have implied an upward revision on telecommunication services, locally manufactured goods, single-use plastics, and an import adjustment levy on certain categories of vehicles. We expect further depreciation in the naira in subsequent weeks as further demand from the central bank-managed windows trickles into the unofficial market. 

Further reading:  

BusinessDay — Suspension of tax increments averted threat to manufacturers – MAN

Ghanaian Cedi (GH¢)

Compiled by Sakina Seidu

The Ghana cedi has been stable throughout the week averaging at a rate of USD/GHS 11.7250.

After a sharp appreciation against the U.S. dollar last week, the cedi steadily lost some of its value, finding itself swinging between a rate of USD/GHS 11.7050 and 11.7450. Individual bondholders who neglected to sign up for the infamous domestic debt exchange program (DDEP) that Ghana undertook from the end of year 2022 to early parts of 2023, have been reassured of receiving their outstanding coupon payments. This offers positive news to the market as an indication of a recovering economy. Further lending a positive outlook on the Ghanaian economy, the Bank of Ghana came out with a statement on their decision to sell $120 million to support the bulk oil distribution companies (BDCs) for the third quarter of 2023. 

We expect the cedi to continue to show improvement in the light of positive market news.

Further reading:  

Citi Business News — Government honors obligations; pays matured coupons of individual bondholders 

Citi Business News — Bank of Ghana to auction $120 million to BDC’s in 2023 third quarter

South African Rand (R) 

Compiled by Alex Barmuta

The USD/ZAR closed out last week trading at 18.8372. The new week saw the rand recover some ground. By Wednesday afternoon, the rand was trading around 18.30 against the U.S. dollar.

The rand’s sudden strength is mainly fueled by a weaker dollar, as U.S. inflation data showed it had cooled to 3%, signaling that the U.S. Federal Reserve’s rate hike cycle may be close to over.

Locally, data released Tuesday by Statistics SA, showed that manufacturing data in May increased by 2.5% year-on-year. 

Looking ahead, we can expect the rand to continue trading in the 17.90 – 18.20 range, with a break below these levels possible if the U.S. dollar continues to remain under pressure in the week ahead. 

Further reading:  

Reuters — South African manufacturing output up 2.5% year over year in May

Egyptian Pound (EGP)

Compiled by Mitchell Diedrick

The Egyptian pound traded at USD/EGP 30.89 in midweek trading, similar to the previous week’s close.

On Monday, the Central Bank of Egypt announced the nation’s annual core inflation had reached 41% in June compared to 40.3% in May, while urban inflation hit a record high at 35.7% in June compared to 32.7% in May.
The increase in inflation continues to emphasize the rising costs of importing goods, especially wheat, that Egypt largely relies on.
Last month the central bank kept interest rates on hold but may be forced to increase them in light of the recent inflation print for June as the country requires inflows of dollars.

In the search for dollars, Prime Minister Mostafa Madbouly announced that Egypt has agreed to sell $1.9 billion worth of state-owned enterprises to the private sector, and another $1 billion deal will be announced soon.


In the week ahead, we expect the pound to remain stable, around USD/EGP 30.90.

Further reading:  

Egypt today – Egypt’s annual core inflation records 41% in June: CBE

Kenyan Shilling (KSh)

Compiled by Terry Karanja

The Kenyan shilling weakened further to a low of USD/KES 141.20 due to the sustained pressure from oil importers and the manufacturing sector. This has led to a high cost of living as manufacturers are spending more to secure dollars to make payments in international trades and ultimately passing the cost of products to consumers. Monday next week, the International Monetary Fund executive board will consider approving a 57.8 billion shillings loan to Kenya. The loan is expected to be used to fund development projects that would support the economy. The Kenyan and Iranian governments also signed five memoranda of understanding on sectors of information technology, investment promotion, fisheries, and livestock products. This came after Iranian President Ebrahim Raisi visited Kenya as he seeks to expand Iran’s economic partnerships amid the effects of U.S. sanctions. We expect to see more pressure on the shilling with increased forex demand.

Further reading:  

voanews — Iranian President Visits Kenya in Effort to Boost Economic Ties
Nation — IMF to meet on Monday for Sh57bn Kenya loan approval

Ugandan Shilling (USh)

Compiled by Yadhav Panday

The USD/UGX 3,668.917 on Wednesday, July 12, 2023, decreased 0.7% from the previous Friday. 

Looking ahead, we expect USD/UGX to strengthen to 3,720 in the coming week, as Uganda’s parliament passed a new tax law that imposes a 5% levy on income earned in the country by foreign providers of digital communications services such as Twitter and Meta’s Facebook. The bill has sparked concern in some quarters, with critics, including opposition lawmakers and human rights advocates, warning that it could lead to social media companies charging Ugandans for services that are currently free.

Further reading:  

Reuters — Uganda imposes levy on foreign digital companies’ income

Tanzanian Shilling (TSh)

Compiled by Kristin Van Helsdingen

Once again, the Tanzanian shilling has continued to weaken against the U.S. dollar, hitting its weakest level on Friday at USD/TZS 2,445 since 2017. The currency pair has seemed to stabilize at this level and has continued to trade closely to USD/TZS 2,445 this week.

Tanzania has continued to focus on developing infrastructure. It secured a loan worth USD 60 million from the Organization of Petroleum Exporting Countries Fund for International Development, which it plans to use to build a 166 km power line which would connect the region of Kagera to the national grid.

As it’s been a relatively quiet week for Tanzania with regard to economic news, we expect the Tanzanian shilling to continue its weakening trend. As the U.S. releases its Consumer Price Index (CPI) data this week, we can expect some speculation around the Federal Reserve’s interest rate decision along with the volatility of the U.S. dollar. USD/TZS is expected to trade around 2,450 in the week ahead.

Further reading:  

Energy Capital & Power – Tanzania Secures $60M Loan for Kagera Power Transmission Line

FXStreet – US CPI Data Release: Inflation expected to slow down in June

West African CFA Franc Region (XOF)

Compiled by Jean Cédric Nando KOUA 

The tightening of monetary policy initiated since 2022 by the central bank as part of the fight against inflation continues to show encouraging results.

Inflation, which was 8.4% in October 2022, gradually declined to stand at 3.9% in May 2023.

This 0.7-point drop compared to April 2023 is mainly due to the large local cereal supply, the drop in transport prices, food imports (-16.2%) and consumer products (-47.2% for wheat).

Despite the significant deceleration in inflation, efforts are still needed to reach the community standard of 3%. 

Further reading:  

Sika Finance – WAEMU: Inflation drops by 0.7 points to 3.9% in May 2023

Central African CFA Franc Region (XAF)

Compiled by Jean Cédric Nando KOUA 

Cameroon raised XAF 49 billion on the regional market.

During its first issue of treasury bonds of the year on July 10, 2023, investors showed great interest by offering XAF 54.5 billion against a sought amount of XAF 50 billion.

To make its operation attractive, the Cameroonian treasury offered up to 5% interest on its 26-week maturity securities and rejected offers beyond this rate to finally retain XAF 49 billion.

This funding will enable Cameroon to respond immediately to its developing projects. 

Further reading:  

Investir au Cameroun – Treasury bonds: Cameroon raises its interest rate and raises 49 billion FCFA, a first for 7 months


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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