Kenya Gets World Bank deal, Rand Demand Rises Off U.S. Jobs Data

Nigerian Naira (₦)

Compiled by Ikenga Kalu

The naira remained relatively stable against the U.S. dollar, oscillating between USD/NGN 741 and USD/NGN 743 over the past week. Nigeria’s manufacturing sector experienced a rebound in April after the federal government reneged on its decision to phase out the three largest naira denominations. The ease in the cash shortage caused a boost in both manufacturing output and customer demand, which in turn led to an increase in the purchasing manager’s index to 53.8 in April from 42.3 in March. At present, cash is still king in the market as business owners defer to e-payment channels rather than using their store of physical cash for fear of a reenactment of the central bank cashless policy. As confidence in physical cash spending returns to the market, we expect a gradual increase in FX demand to weaken the  naira beyond the current psychological level of 750 in the coming months. 

Further reading:  

Premium Times — Nigeria’s manufacturing activity rebounds in April as cash crisis eases

Ghanaian Cedi (GH¢)

Compiled by Murega Mungai

The cedi depreciated marginally against the greenback from USD/GHS 11.80 to USD/GHS 11.84 in the course of the week. High costs of labour and import duties on machinery and inputs have put significant strain on rice producers in Ghana, who struggle to meet the pent-up demand for their produce, according to B&FT Online. Ghana considerable imports of rice have also been known to adversely affect local production, along with the exchange rate and overall economy. Given this situation, rice producers have called on the government to create a more conducive environment for local production to increase. For the cedi, support has come from positive sentiment related to the $3 billion IMF bailout package. However, with the next tranche of IMF payments not expected until the third quarter, there is room for further cedi depreciation in the coming months.

Further reading:  

B & FT — High labor costs, import duties thwarting local rice production

Myjoy online — Earliest Ghana can secure IMF deal is 3rd quarter – Dr Ato Forson

South African Rand (R) 

Compiled by Alex Barmuta

The rand opened the new week at 18.2636, as it continues in the same trading range as last week — moving between the 18.00 support and 18.50 resistance levels.

On Tuesday, the USD/ZAR rate briefly touched 18.50, before strengthening. On Wednesday, we saw the rand continue appreciating further away from the 18.50 resistance level, as weak U.S. jobs data created some demand for the rand.

From a local perspective, data released showed that South African manufacturing activity remained in contractive territory in April (49.8 points), albeit to a lesser extent than in March (48.1 points) and February (48.8 points), according to the Absa Purchasing Managers’ Index (PMI). Subdued growth projections in the economy (largely caused by continued rotational power cuts) also continue to weigh heavy on the rand.

Looking ahead, we can expect the rand to continue to trade between the 18.00–18.50 levels against the dollar — a range that has remained largely intact since the first week of April.

Further reading:  

Businesstech — Rand on the back foot as markets hold their breath

Egyptian Pound (EGP)

Compiled by Mitchell Diedrick

The Egyptian pound remained relatively stable over the past week against the U.S. dollar and briefly breached the USD/EGP 31 level on May 1, 2023. 

Data released by the central bank revealed a current account surplus equivalent to US$1.4 billion for the last quarter of 2022. The surplus can largely be attributed to a rise in exports, increased tourism and higher revenue from the Suez Canal, accompanied by a decrease in imports. 

Pressure remains on the Egyptian pound to depreciate further in the latter part of 2023 considering current conditions and requests by the International Monetary Fund as part of the current loan facility.
In the week ahead the Egyptian pound should remain around the levels we have observed in recent weeks and gradually approach the USD/EGP 31.10 level. 

Further reading:  

Reuters — Egypt’s current account moves into surplus Oct-Dec

Kenyan Shilling (KSh)

Compiled by Terry Karanja

The Kenyan shilling remained under pressure this week, sliding to a historic low of 136.02 against the U.S. dollar due to a shortage of FX in the local market. Elevated dollar demand from energy importers and rising U.S. interest rates amid efforts to curb inflation have heaped more pressure on the shilling. This has consequently pushed the cost of living higher, especially food, electricity, and fuel prices. The weakened exchange rate hasalso foreign debt repayment obligations to increase. Kenya’s national electric utility company Kenya Power and Lighting Company (KPLC), will be provided with a Sh40.8 billion ($300 million) interest-free loan by the World Bank. The funds will be released through the treasury under a seven-year programme and will be used to help pay debts, renovate old transmission networks and expand the national grid. In the week ahead, we foresee more pressure on the shilling with increased forex demand and dwindling support from reserves, whichstood at USD 6,508 million, a drop from USD 6,539 million the previous week.

Further reading:  

Business Daily – World Bank lines up Sh40bn soft loan for Kenya Power

Ugandan Shilling (USh)

Compiled by Yadhav Panday

The Ugandan shilling traded at 3,725, down 0.27% from the previous trading session. Uganda announced a new tourism initiative, stating that it will expand airfields at its national wildlife parksUganda’s parliament watered down an anti-homosexuality bill that would have criminalized people for identifying as LGBTQ+. Looking ahead, we expect the shilling to be worth 3,770.07 by the end of this quarter and 3,886.50 in a year.

Further reading:  

Travel Pulse – Uganda Announces New Tourism Initiative

Tanzanian Shilling (TSh)

Compiled by Kristin Van Helsdingen

The Tanzanian Shilling traded within a narrow bracket against U.S. dollar this past week, touching 2,351, its weakest level since March 2019, and climbing as high as 2,347. Bid and offer rates for the Tanzanian shilling against the U.S. dollar are currently at 2,345 and 2,355, respectively.

Fuel subsidies introduced by the government last June to reduce the effects of inflation were removed on Wednesday. As a result, prices for petrol in the northern region increased by 90 shillings per liter, though prices in the southern regions remained stable as no new imports were needed.

In other news, Tanzania is talking about the prospects of joining forces with a Chinese company to build a 50 km bridge to connect the mainland to Zanzibar. Discussions of this bridge began this March.

As citizens start feeling the effects of rising fuel costs, we can expect the shilling to weaken slowly over the next few months. However, in the week ahead, we expect the shilling to remain relatively stable and trade around its weaker levels of USD/TZS 2,350.

Further reading:  

THE CITIZEN — Fuel prices go up after removal of subsidies

THE CITIZEN — Tanzania to build bridge between Dar es Salaam and Zanzibar

West African CFA Franc Region (XOF)

Compiled by Jean Cédric Nando KOUA

The central bank’s tightening of monetary policy since the beginning of 2023 seems to be paying off. After falling in January, inflation stood at 5.7% at the end of March, the same level as the previous month.

In detail, inflation is mainly driven by the cost of food, housing and transportation, which account for 4.6 percentage points of overall inflation.

Although declining, the level of inflation is still high compared to the economic union standard of 3%.

Further reading:  

Sika finance — WAEMU: Inflation remains at 5.7% in March 2023

Central African CFA Franc Region (XAF)

Compiled by Jean Cédric Nando KOUA

Prices of agricultural exports from the XAF region increased by 7.3% in the first quarter of 2023.

The region benefited from increased global demand for bananas, cocoa and rice, with export prices rising by 11.7%, 10.9%, and 9.8%, respectively. As for palm oil and rubber, which were down in the last quarter, the recovery in demand from China — the world’s largest importer — has had a strong impact on prices, with increases of 3.2% and 8.2%, respectively.

This international situation is favorable for increasing government budget revenues and for strengthening the central bank’s foreign exchange reserves.

Further reading:  

Investir au Cameroun — Prices of agricultural products exported from CEMAC up 7.3% in the 1st quarter 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.

Related to this article

4 Things You Should Know When Managing Payroll Payments in Africa

Whether you’re a payroll provider, or a freelancing company in or venturing

2 Minute
Fintech Fuel Uganda: Improving Efficiency in Cross-Border Payments

The AZA Finance breakfast networking event “FinTech Fuel Uganda” recently brought together

2 Minute
What_it means_to_be_an_Africa_first_b2b_fintech_AZA_Finance
Company announcements
What it means to be an Africa-first b2b fintech

For the past ten years, we’ve been laser-focused on helping businesses across

2 Minute
Company Culture
Circle And AZA Finance Issue Paper

About the white paper AZA Finance, a pan-African fintech company, and Circle,

3 Minute Read-Time

News & Updates

Subscribe now to our weekly African FX newsletter to get actionable insights on currencies, trading and regulations straight from AZA Finance to your inbox.
Please enable JavaScript in your browser to complete this form.