Strong Dollar Helps Force Depreciation Of The Cedi; External Factors Influencing Rand Value

Nigerian Naira (₦) 

Compiled by Ikenga Kalu

The naira clawed back some gains against the U.S. dollar, climbing from USD/NGN 930 recorded last week to USD/NGN 910 this week. 

Petrol marketers have cited their inability to source forex at the Central Bank of Nigeria (CBN) window as the basis for possibly hiking the price of fuel. As a result, the marketers have halted fuel importation because sourcing forex at the substantially higher parallel market rate would make it prohibitive to sell at the government-mandated pump price. The Nigeria Labour Congress threatened to go on strike following hints by petrol marketers that the pump price of fuel might spike to 720 NGN/liter should the naira continue its wild depreciation. In response, the office of the presidency issued a statement saying it did not expect any further petrol price hike, which essentially calls into question the subsidy removal. 

The acting governor of the central bank has vowed to introduce measures to clamp down on currency speculators in the bid to afford some respite to the falling naira. This prompted a two-day trend reversal which reportedly pushed some offers into the mid USD/NGN 890 levels. However, questions have been raised regarding the sustainability of this new naira rally.

We expect further appreciation of the naira in the coming days. We may see some profit-taking as the parallel market rate gets close enough to the official market rate, which may curtail the appreciation.

Further reading:  

Punch — NLC protests proposed fuel price hike, threatens fresh strike

The Nation — Marketers stall petrol importation over forex unavailability

ThisDay — Subsidy is Gone! Long Live Fuel Subsidy

Ghanaian Cedi (GH¢)

Compiled by Sakina Seidu

The U.S. dollar bounced back against the cedi as market levels moved from USD/GHS 11.2 to 11.375 at the close of the week, with corporate institutions’ requests for forex increasing.

This comes on the back of the increase in the cost of goods and services shown in the inflation rise for July 2023. Also, the Chamber of Petroleum Consumers (COPEC) has sounded an alert on the impending increase in petrol, diesel, and liquefied petroleum gas (LPG) in the coming days. COPEC estimated increases of 5% for petrol/diesel and 11% for LPG.

We can expect these costs to go higher and a continued depreciation in GHS, given the increase in the dollar.

Further reading:  

Inflation outlook for August 2023 could prompt further policy action 

Petrol to sell at GHS 12.97, diesel GHS 13.43 per liter – COPEC

Petrol prices: Why are they going back up?

South African Rand (R) 

Compiled by Alex Barmuta

The South African rand started the new week at USD/ZAR 18.9471 before crossing back above the 19 level as of Wednesday afternoon. 

External factors continue to influence the rand as a stronger dollar, combined with ongoing concerns about the Chinese economy, continue to weigh on the rand. 

Domestically, signs of easing on rotational power cuts have seen some analysts forecast major gains for the rand in Q1 2024.

Looking at the week ahead, we can expect the rand to continue trading close to 19 against the dollar. Daily resistance is expected around 19.20 to the upside, and support around 18.90.

Further reading:  

Bloomberg — Rand Seen Getting a Boost From Better South African Power Supply

Egyptian Pound (EGP)

Compiled by Mitchell Diedrick

The Egyptian pound crossed over the psychological resistance level of USD/EGP 31 this week to trade at USD/EGP 31.07 on Monday before retreating to 30.95 against the dollar. 

A more flexible pound has been a topic of many discussions especially relating to the International Monetary Fund (IMF) deal that was granted toward the end of last year. The presidency has stated that while it is open to a more flexible exchange rate regime, it needs to protect the citizens. IMF Managing Director Kristalina Georgieva has said that the IMF is engaged in positive talks with the Egyptian government and will lean on the IMF’s expertise to assist the Egyptian government with further privatization of the economy. 

Furthermore, they believe that the Egyptian government can assist in reforming the economy by reducing involvement in economic activities, enhancing subsidies to the most vulnerable citizens, and investigating opportunities to improve Egypt’s foreign exchange reserves.

Further reading:  

Egypt today – Egypt’s economy and IMF agreement amid exchange rate uncertainty

Kenyan Shilling (KSh)

Compiled by Terry Karanja

The Kenyan shilling is trading between USD/KES 143.70/144.10 which is a drop from 143.20/143.50 the previous week. The Central Bank of Kenya has left its benchmark lending rate unchanged at 10.5% after noting that the inflation pressures had eased. The Monetary Policy Committee noted that inflation is already within the target band of 2.5% to 7.5%. It was at 7.3% in July and is anticipated to decline further as food inflation is expected to come down. The Committee also noted that inflationary pressures had eased as non-food, non-fuel inflation declined. The impact of the tightening of monetary policy in June 2023 to anchor inflationary expectations was still transmitting in the economy, thus retaining the CBR rate. The usable foreign exchange reserves remained adequate at USD 7,357 million, which is 4.02 months of import cover that meets the CBK’s statutory requirement to maintain at least four months. We expect to see more pressure on the shilling with increased forex demand.

Further reading:  

BusinessDaily – CBK holds the benchmark lending rate on inflation ease

Ugandan Shilling (USh)

Compiled by Yadhav Panday

USD/UGX traded at 3,727 on Wednesday, Aug. 16, 2023, up 0.19% from last Friday. Looking ahead, we expect USD/UGX to weaken as a result of the Bank of Uganda deciding to reduce its benchmark interest rate to 9.5% from 10%. The move — an effort to stimulate economic activity after inflation fell below its target — came during its meeting on Aug. 15. Uganda’s annual inflation rate fell for the sixth consecutive month in July 2023, to 3.9%, from 4.9% in June; the lowest level since March 2022.

Further reading:  

Bloomberg – Uganda Cuts Rates, Vows to Act if World Bank LGBTQ Move Hits FX

Tanzanian Shilling (TSh)

Compiled by Kristin Van Helsdingen

The Tanzanian shilling weakened to USD/TZS 2,505 last week Thursday. This is the weakest level for the shilling against the U.S. dollar since 2017. It has continued trading around this level and is currently at USD/TZS 2,502. With the shilling nearing its all-time weakest level against the dollar, we expect this to have a knock-on effect as the cost of importing increases the price of products, ultimately causing rising inflation.

Data released by the Bank of Tanzania showed that non-traditional exports grew by 4.2% in June, year-on-year. The increase was mainly driven by minerals. The total USD value in exports for this period was $12,767.6 million. 

Looking at the week ahead, we can expect the shilling to weaken to around the USD/TZS 2,510 level, as the uptick in dollar strength will likely keep the shilling under pressure.

Further reading:  

Daily news — Minerals, services receipts drive up export earnings

West African CFA Franc Region (XOF) 

Compiled by Yashveer Singh

Burkina Faso established the national Society of Precious Substances (SONASP) on Aug. 9, 2023, aiming to enhance profits from gold mining and to promote responsible, sustainable mining practices. This new state-owned company replaces the previous national agency responsible for supervising artisanal and semi-mechanized mining operations. The previous agency, ANEEMAS, was formed in 2015 to oversee gold mining, minimize environmental impacts, improve safety, prevent fraud, and eliminate child labor in the sector. The new company, SONASP, holds expanded responsibilities, including processing, marketing, and mechanization of mining products. 

Specific details of the recent amendments to the mining code made in April 2023 are yet to be disclosed. They are likely to follow a similar path as neighboring Mali, which seeks to increase the mining sector’s contribution to the economy. Mali adopted a new mining code this month, enabling the government to hold up to 35% interest in mining projects, up from the previous limit of 20% in the 2019 code.

Further reading:  

Sikafinance with Burkina: The government creates a company to better profit from mining

Central African CFA Franc Region (XAF)

Compiled by Yashveer Singh

Finance Minister Louis Paul Motaze led a workshop in Bangou, Cameroon, on Aug. 7, 2023, to promote Tresor Pay, a platform designed to collect nontax revenues, including fines, rents, fees, and more. The government has struggled to manage these revenues, collecting CFAF 160 billion in 2021 against a target of CFAF 187.4 billion. The 2023 budget aims for CFAF 250.4 billion from nontax revenues out of an estimated CFAF 800 billion. Tresor Pay seeks to optimize collection to meet this potential, four times the 2023 target. 

The Ministry of Finance has prioritized improving nontax revenue collection due to declining internal revenues and rising state expenses driven by security, debt, and development spending. The outlook for 2024 remains challenging, according to the ministry.

Further reading:  

Business in Cameroon — Cameroon launches platform to optimize the collection of non-tax revenues


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.