Menu

Rand poised for Ramaphosa recovery plan; Tanzania Shilling stable before election

Dollar hoarders test CBN mettle


The Naira lost ground from last week’s gains, sliding to 461 to the dollar in the unofficial market from 457 a week ago. Lower oil export revenue and the economic impact from the pandemic will cause external reserves to sink to between $29.9b and $34.3b, from $35.7b in September, the CBN projected in a report earlier this month. Even though speculative buying has been lower than normal, anticipation of Naira depreciation has driven hoarding of dollars, while demand for FX from manufacturers persists. While the CBN has tried measures within its mandate to ensure it meets FX demand, it is likely to see continued pressure on the local currency in the coming days.

Rand may gain as Ramaphosa outlines recovery measures

The Rand firmed up at levels of 16.45 from 16.54 last week, supported by intermittent spurts of global risk appetite on expectations of a stimulus package in the US that would weaken the dollar and boost the emerging market bellwether currency. While hopes in the US seem dashed for now, further gains for the Rand may follow from South African President Cyril Ramaphosa outlining measures the government is putting in place to spur economic recovery.

Oil importers drive Kenyan Shilling lower

Kenya’s Shilling edged lower during the week to 108.50/70 levels on the back of high demand from oil and merchandise importers. The weakening of the exchange rate has caused a spike in electricity prices, the Energy and Petroleum Regulatory Authority (EPRA) warned. The IMF in its latest global economic outlook, issued on Tuesday, forecast economic growth of 1% for 2020. This falls well short of National Treasury and Central Bank of Kenya projections of 2.6% and 3.1%, respectively. The IMF’s 2021 outlook is also less optimistic, revised down to 4.7% from an earlier 6.1%, largely due to the second wave of COVID-19 infections. We foresee continued pressure on the Shilling in the coming week from increased dollar demand by importers.

Uganda heading for recession snags Shilling

The Ugandan Shilling weakened slightly to 3,710/3,720 per dollar due to an uptick in demand, mainly from players in the interbank market. Moody’s downgraded Uganda’s economic strength to Ba3 from Ba2-stable, citing relatively low productivity, high transport costs and the economy’s comparatively small size and low wealth levels indicating limited shock absorption capacity. The IMF expects Uganda’s economy to contract by 0.3% in 2020 and expand 4.9% next year. We foresee continued pressure on the Shilling in the coming week.


Tanzanian Shilling stable during election countdown

In the face of political noise in the run-up of the Oct. 28 presidential elections, Tanzania’s Shilling remained relatively stable against the dollar, trading at 2315/2320 (2320) from 2313/2327 (2320) a week ago. Support for the currency came from inflows for agricultural sectors and charities, helping to balance dollar demand from importers in the manufacturing and energy sectors. The government received dividends from Twiga Mining company totaling $40 million (about Sh100 billion) and a Sh1.1 billion dividend from the State Mining Corporation. President Magufuli said the funds would go towards improving education, healthcare, and other social services. Tanzania came top for resilience in the IMF’s global economic outlook, with growth projections for 2020 at 1.9% matched only by Ethiopia. Tanzania signed an MOU with the Embassy of Netherlands on Tuesday in which it receives an undisclosed amount to support Tanzania startups as a solution to youth unemployment. With such trade and investment inflows, we foresee the currency remaining steady in the coming week.

Sign up for our weekly FX newsletter here!

Issued by AZA. 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 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
4 Things You Should Know When Managing Payroll Payments in Africa

Whether you’re a payroll provider, or a freelancing company in or venturing into Africa, you have probably struggled with the diverse and rapidly evolving financial

Fatimah_Gana_Mahmou_Head_of_Sales_for_West_Central_Africa_AZA_Finance_fintech_fuel_Uganda
Fintech Fuel Uganda: Improving Efficiency in Cross-Border Payments

The AZA Finance breakfast networking event “FinTech Fuel Uganda” recently brought together Uganda’s innovative startups and major corporations to discuss the future of cross-border payments.

What_it means_to_be_an_Africa_first_b2b_fintech_AZA_Finance
What it means to be an Africa-first b2b fintech

For the past ten years, we’ve been laser-focused on helping businesses across the continent create Africa’s trillion-dollar growth. By building financial infrastructure and more connections

Authority Magazine: Sukhi Srivatsan Of AZA Finance On How to Build Lasting Customer Relationships

In an interview with Authority Magazine, Sukhi Srivatsan, Head of Account Management Operations at AZA Finance, shares insights on building lasting customer relationships. Emphasising communication,

4_things_you_should_know_when_managing_payroll_payments_in_Africa
4 Things You Should Know When Managing Payroll Payments in Africa

Whether you’re a payroll provider, or a freelancing company in or venturing into Africa, you have probably struggled with the diverse and rapidly evolving financial

Fatimah_Gana_Mahmou_Head_of_Sales_for_West_Central_Africa_AZA_Finance_fintech_fuel_Uganda
Fintech Fuel Uganda: Improving Efficiency in Cross-Border Payments

The AZA Finance breakfast networking event “FinTech Fuel Uganda” recently brought together Uganda’s innovative startups and major corporations to discuss the future of cross-border payments.

What_it means_to_be_an_Africa_first_b2b_fintech_AZA_Finance
What it means to be an Africa-first b2b fintech

For the past ten years, we’ve been laser-focused on helping businesses across the continent create Africa’s trillion-dollar growth. By building financial infrastructure and more connections

Authority Magazine: Sukhi Srivatsan Of AZA Finance On How to Build Lasting Customer Relationships

In an interview with Authority Magazine, Sukhi Srivatsan, Head of Account Management Operations at AZA Finance, shares insights on building lasting customer relationships. Emphasising communication,

Forbes: Africans Don’t Need U.S. Crypto ETFs As Much As They Need African-Specific Regulation

Elizabeth Rossiello argues that Africans need clear, African-specific cryptocurrency regulations more than U.S. crypto ETFs. U.S. bitcoin ETFs have boosted bitcoin prices, driving interest in

Circle And AZA Finance Issue Paper

About the white paper AZA Finance, a pan-African fintech company, and Circle, a global digital financial technology firm and the issuer of USDC and EURC,

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.
Close