Skip links

Uganda’s inflation lowest since April 2022; Moody’s sinks Cameroon’s credit rating

Nigerian Naira (₦) 

Compiled by Ikenga Kalu

The naira lost further ground against the U.S. dollar falling from USD/NGN 872 to USD/NGN 875. The National Labour Congress responded to the spiraling inflation caused by the hike in fuel prices, FX rates, and school fees, by setting aside Aug. 1, 2023 to embark on a nationwide protest in a bid to repeal what it terms as poor government policies. President Bola Tinubu has appointed Jim Obazee, chief executive officer of the Financial Reporting Council of Nigeria, , as a special investigator to hold the Central Bank of Nigeria and related entities accountable. Obazee was chosen specifically for this post as he proved to be outspoken against various public entities in previous administrations. We expect to see some resistance at the USD/NGN 880 level in the coming days as FX supply continues to test market resilience. 

Further reading:  

Nairametrics — Tinubu appoints FRC’s Jim Obazee as special investigator

ChannelsTV — NLC Insists No Going Back As Nationwide Protest Begins Wednesday

Ghanaian Cedi (GH¢)

Compiled by Sakina Seidu

The cedi held steady throughout the month of July 2023. August 2023 however, started out with a sharp 3% appreciation of the GHS against the dollar. This could be linked to a downgrade of the U.S. dollar’s long-term foreign-currency issuer default rating from ‘AAA’ to ‘AA+’. This raised an alarm, causing holders of the dollar to sell off leading to the influx of forex seen on the market Aug. 1 and Aug. 2, 2023.

Finance Minister Ken Ofori-Atta expressed his optimism of Ghana’s economic prospects at the July 31, 2023 presentation of the midyear budget review to parliament. Contrary to his assertion, the statement he read includes the fact that the country’s GDP is expected to decline drastically — up to half the initial expected rate to 1.5% by end of 2023. He went ahead to explain the need to reduce the expected petroleum revenue due to a drop in the current price of oil. Also looming is another domestic debt exchange program (DDEP) for pension funds. The rating agency Fitch has reaffirmed the country’s long-term local and foreign currency issuer default ratings to restricted default (RD) after Ghana missed coupon payments of foreign bonds and the plan to restructure cocoa bills.

In spite of this, the market players favored the cedi against the dollar. We therefore expect that the cedi would continue to appreciate in value amid the influx of foreign exchange in the market.

Further reading:  

Fitch ratings — Fitch Downgrades the United States’ Long-Term Ratings to ‘AA+’ from ‘AAA’

Myjoyonline — ‘We have turned the corner’ – Ofori-Atta optimistic of economic recovery

CBN — Mid-Year Fiscal Policy Review document

B&FT — 2023 Petroleum receipts to drop by 32%

Modern Ghana — Government to restructure GHS 31 billion Pension Funds

Modern Ghana — Fitch affirm Ghana’s rating at ‘Restricted Default’

South African Rand (R) 

Compiled by Alex Barmuta

The South African rand closed last week’s trading at 17.5982 against U.S. dollar. The new week saw a shift of momentum, as the USD/ZAR crossed back above 18. By Wednesday afternoon, it was trading at the 18.50 levels.

Driving the big moves seen since last week include a shift in global risk sentiment due to some concerns around the Chinese economy, and a stronger dollar. For reference, the U.S. dollar index, closed last week’s trading at 101.7 — and was trading at 102.70 by Wednesday.

Looking ahead, we expect the rand to trade between 18.30 – 18.60 against the dollar. A move above 18.60 is possible, if the global risk sentiment continues to dampen further.

Further reading:  

Reuters — South African rand falls 2% as risk-off mood takes hold

Egyptian Pound (EGP)

Compiled by Mitchell Diedrick

The Egyptian pound depreciated marginally in midweek trading to USD/EGP 30.92 after closing on Friday around USD/EGP 30.90.

According to Egyptian Central Bank data, Egypt’s net foreign assets decreased to negative 837.3 billion pounds. Increasing inflation and a continued shortage of foreign currency have exacerbated the decrease in net foreign assets.

Morgan Stanley, a U.S.-based investment bank, said it believes the pound is likely to depreciate between September and October this year to coincide with reviews by the International Monetary Fund (IMF) on its loan agreements with Egypt.

In the coming week we expect the pound to remain around levels of USD/EGP 30.90 in the absence of any external shocks. S&P Global PMI and an interest rate decision are due later this week on August 3, 2023.

Further reading:  

ZAWYA – Egypt’s net foreign assets deficit widens by $2.66bln in June
Egypt Independent – Egyptian pound to be devalued in September/October: Morgan Stanley

Kenyan Shilling (KSh)

Compiled by Terry Karanja

The Kenyan shilling has remained relatively stable against the dollar and is currently trading at the levels of 142.02/142.80. The usable foreign exchange reserves have remained adequate at USD 7,377 million which is 4.03 months of import cover which meets the statutory requirement to maintain at least 4 months of import cover.President William Ruto speaking at State House on Aug 1, 2023 said he was proud of his government’s efforts and interventions in ensuring they stabilize the economy. He mentioned the way to reduce the rising cost of living is to ensure food security by empowering farmers. This will be done by reducing the price of fertilizer to KSh 2,500 for a 50kg bag from what was being sold at KSh 7,000 the previous year. Also the Central Bank of Kenya Governor Kamau Thugge stated that inflation is expected to decline in the coming months as Kenya consults the IMF in handling the inflation levels of the economy. 

The shilling is expected to weaken further in the coming week, driven by demand for dollars from the manufacturing and energy sectors.

Further reading:  

tuko — William Ruto Says Kenya Kwanza Has Stabilised Economy: “I’m Very Proud”
The herald — Kenya to consult IMF in tackling inflation

Ugandan Shilling (USh)

Compiled by Yadhav Panday

This Wednesday, Aug. 2, 2023 USD/UGX traded at 3,620, unchanged from last Friday. Looking ahead, we anticipate USD/UGX to decrease because Uganda’s annual headline inflation rate fell to 3.9% in the last 12 months — from 5.3% in April 2022 due to falling commodity prices. Food and petrol prices are driving the decline, with food accounting for 60% of the inflation calculation and energy and petrol accounting for 20%. Services inflation and energy costs are also falling, which contributes to the overall slowing of inflation.

Further reading:  

Business Insider Africa — Uganda’s economy sees positive signs as inflation drops to its lowest in 15 months

Tanzanian Shilling (TSh)

Compiled by Kristin Van Helsdingen

The USD/TZS had more volatility than usual, spiking at 2,456 toward the end of last week from USD/TZS 2,445. Over the weekend the shilling strengthened marginally, however, this week we noticed a further weakening of the shilling and it is trading at USD/TZS 2,470. The shilling has weakened by 5.3% against the U.S. dollar year to date.

Fuel prices in Tanzania have skyrocketed this month, increasing by 17%, rising from TZS 2,736 last month to TZS 3,199 per litre of petrol. This increase will most likely create a knock-on effect causing inflation to rise in the months ahead. 

According to the Energy and Water Utilities Regulatory Authority (EWURA), a shortage of U.S. dollars which has led to an increase in importing fuel is the reason for the fuel spike. This is contrary to what the Bank of Tanzania has been saying regarding foreign reserves.

It is expected that USD/TZS will continue to appreciate in the week ahead and could possibly be trading around USD/TZS 2,480 by next week.

Further reading:  

allAfrica – Tanzania: BoT – Forex Reserve Climbs Up

THE CITIZEN – Fuel prices hit the roof in Tanzania

West African CFA Franc Region (XOF) 

Compiled by Yashveer Singh

The Central Bank of West African States (BCEAO) has canceled a planned 30 billion CFA franc ($51m) bond issuance by Niger in the West African regional debt market, in response to a recent coup in the country. The Economic Community of West African States (ECOWAS) has demanded the reinstatement of Niger’s ousted President Mohamed Bazoum within a week and has imposed sanctions, including a halt to all financial transactions and a freeze on national assets, to pressure the coup plotters to restore constitutional order. Niger’s upcoming bond issuances on Aug. 7, 2023 and Aug. 17, 2023 have also been affected. France, the former colonial ruler of Niger, has condemned the coup, while the European Union has suspended security cooperation and financial aid, and the United States has warned that its aid could also be at risk. Niger, being one of the world’s poorest countries, relies heavily on external aid and financing.

Police and protesters have clashed in unrest across Senegal after the opposition leader Ousmane Sonko was arrested. The protests have also been fuelled by economic inequalities and concerns over young people’s standard of living. ECOWAS has condemned the violence and called on “all parties to exercise restraint and remain calm”

Further reading:  

aljazeera – West African central bank cancels Niger $51m bond issuance due to sanctions

Central African CFA Franc Region (XAF)

Compiled by Yashveer Singh

In the first quarter of 2023, factory gate prices in the agri-food industry increased in Cameroon, despite a 1.2% decrease in production costs in the country’s industrial sector. The Industrial Producer Price Index (IPPI) published by the National Institute of Statistics (INS) revealed that production costs in the agri-food industry rose by 2.1% compared to the same period last year.

On July 27, 2023, the U.S. rating agency Moody’s downgraded Cameroon’s foreign currency and local currency long-term issuer ratings, along with its senior unsecured debt rating, from B2 to Caa1. The rating downgrade was attributed to Cameroon’s failure to meet several external debt service payments in late 2022 and throughout 2023. 

The rating given to Cameroon is likely to have a significant impact on the country’s ability to borrow funds. This rating categorizes Cameroon as a risky borrower with a high likelihood of defaulting on international capital markets. As a result, investors may demand high-interest rates when providing financing to the country on capital markets due to its poor borrower profile.

Further reading:  

businessincameroon – Cameroon: Moody’s rating downgrade hardens credit conditions for upcoming foreign-currency-denominated operation


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.

AZA Finance



Speak to us

Need live support?