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Nigerian naira begins to stabilize; Rand gains strength against the U.S. dollar

Nigerian Naira (₦) 

Compiled by Ikenga Kalu

The naira stabilized against the U.S. dollar on the unofficial FX window after appreciating from USD/NGN 1150 to USD/NGN 1145 over the previous week. 

Nigeria’s monthly oil production grew by 1.47 million barrels to 41.867 million in October from 40.396 million barrels recorded in September. Despite this increase, the Nigerian government missed the target set by OPEC by about 12 million barrels.  

Nigeria derives about 90% of its dollar earnings from crude sales, and any shortfall in oil production greatly hampers the capacity of the Central Bank of Nigeria (CBN) to boost the strength of the currency.

Market sentiments are still being driven by the CBN’s drive to clear the FX backlog at the official window.

Further reading:  

This Day — Nigeria Raises Oil Output by 1.47m Barrels, Still 25% Short of Meeting OPEC Quota

Ghanaian Cedi (GH¢)

Compiled by Sakina Seidu

The Ghanaian cedi continued to lose its value against the U.S. dollar, with current levels north of USD/GHS 11.98.

The consumer price index (CPI) continued easing with a 290 basis point drop between September and October, with October Inflation calculated at 35.2%. Ghanaians look forward to Minister for Finance and Economic Planning Ken Ofori-Atta appearing before parliament to read the 2024 budget on November 15. Expectations are especially high with regard to a reduction in taxes and the absence of new taxes.

The cedi’s value is expected to stabilize as we wait to hear from the finance minister on the 2024 budget. 

Further reading:  

Ghana web — Bureaus sell $1 at GH¢12.25, GH¢11.54 on BoG interbank as of November 15

Joy online — October 2023 inflation drops to 35.2%

CNR — Ofori-Atta to present 2024 budget on Wednesday

Business & Finance Times — 2024 BUDGET: Consolidate economic stability, reduce operating cost – businesses urge gov’t

South African Rand (R) 

Compiled by Alex Barmuta

This week, the rand strengthened by more than 2% against the U.S. dollar after U.S. inflation data was released on November 14. The currency pair moved from around USD/ZAR 18.72 on Tuesday down to 18.11 on Wednesday.

The unemployment rate released on Tuesday indicated a marginal fall for the second consecutive quarter; moving from 32.6% in the second quarter of the year to 31.9% in the third quarter. Additionally, on November 15, year-on-year retail sales for September increased by 0.9%. Both adding to the strength of the rand.

With Eskom increasing the amount of power cuts in the country, the rand is not expected to maintain its current strength. We expect the rand to trade around USD/ZAR 18.40 next week.

Further reading:  

REUTERS – South African retail sales rise 0.9% year on year in September

CGTN | AFRICA – South Africa’s unemployment rate falls ahead of elections

REUTERS – South African rand soars over 2% after U.S. inflation data

Egyptian Pound (EGP)

Compiled by Mitchell Diedrick

The Egyptian pound traded marginally stronger on Friday and then rebounded to USD/EGP 30.90 as of Wednesday this week.

Inflationary pressure seems to be easing marginally as annual core inflation for October 2023 was at 38.1% compared to 39.7% in September 2023. Prices of staple items such as grains have reduced while prices of other goods have remained stable.
The impact of the Israel-Hamas conflict on Egypt is yet to take full effect, with tourism only down marginally as well as imports of gas being reduced as a result of limited or no production from Israel. Other impacts are expected to be seen in terms of declining short-term investments and an increase in goods stuck at ports as a result of a foreign currency shortage.

Further reading:  

Reuters – Egypt’s stumbling economy faces new pressures from Gaza crisis

Kenyan Shilling (KSh)

Compiled by Terry Karanja

The shilling is currently trading at a fresh low of USD/KES 151.85–152.30, which is a drop from last week’s levels of USD/KES 151.10–152.10. The weakening shilling is being caused by the increased dollar demand from energy and manufacturing companies. Also, reduction in foreign exchange inflows, such as tourism inflows, has led to a further drop. Central Bank of Kenya Governor Kamau Thugge said the government is targeting to borrow more from the domestic market and, at the same time, mobilizing external funding from multilateral institutions, development partners and regional banks like the African Development Bank for cheaper loans and grants to fund its activities. We expect the shilling to drop as Kenya continues to manage the high cost of debt servicing.

Further reading:  

Citizen digital — CBK Governor Kamau Thugge At Pains To Explain Performance Of Kenya Shilling

Ugandan Shilling (USh)

Compiled by Yadhav Panday

This Wednesday, November 15, USD/UGX traded at 3,780, up 0.40% from last Friday. Looking ahead, we anticipate that the USD/UGX will weaken as a result of Parliament’s approval of legislation granting the government exclusive rights to import and supply fuel and petroleum products in a deal to be implemented with the Dutch-registered Vitol Group.

The government claims that the law, which is expected to go into effect on January 1, 2024, if signed by the president, will lower fuel prices by removing Kenyan middlemen from the fuel supply chain. Uganda currently imports 90% of its petroleum products via Kenya.

Further reading:  

Ugbusiness — Parliament passes law giving government exclusive right to import fuel

West African CFA Franc Region (XOF) 

The Senegalese government received a satisfactory review from the International Monetary Fund (IMF) on fund-supported programs that had targets in place for June 2023. The review is still subject to approval from the IMF’s board; however, once completed, this should allow for the release of further funding from the IMF’s Extended Fund Facility and Extended Credit Facility.
Senegal has performed well in terms of economic growth this year and is expected to achieve growth for 2023 of around 4%.
Increasing investment and development programs like the Ndayane Port are likely to not only drive growth in Senegal but other neighboring regions with the prospect of greater intercontinental trade.

Further reading:  

Energy Capital & Power – Senegal Reaches Agreement with IMF for Increased Disbursement

Central African CFA Franc Region (XAF)

Congo-based truckers of cobalt and copper have finally called a halt to a strike which had been in effect since late October. The truckers had demanded a hazard pay of $700 on top of their salaries and had blocked exports of the commodities to major port destinations in South Africa, Tanzania and Mozambique. 

With Congo being the third-largest producer of copper, a prolonged strike could have led to a global supply deficit and impacted prices on the global markets. The truckers, who were mostly of Tanzania and Zambian origin, could only be pacified by the intervention of the Tanzanian ambassador to Congo. 

Further reading:  

Daily Maverick — Congo’s Copper and Cobalt Trucks On Move as Driver Strike Ends


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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