World Bank commits $250 million to Ghana, Tanzanian economy shows gains

Nigerian Naira (₦) 

The naira depreciated steadily over the past week, falling from $/NGN 731 to $745. The World Bank said the worsening economic situation in Nigeria could lead to an increase in poverty. The country’s fiscal deficit increased to 5%, above the 3% limit set by the federal government, according to the World Bank, which noted that the cash scarcity witnessed earlier this year hampered economic growth and poverty reduction efforts. In response to concerns about the high price of rice, the Rice Processors Association of Nigeria (RIPAN) cited growing insecurity and inflationary pressures as major reasons for price increases. RIPAN noted that even with the increased prices, there is still disparity between the market price of local produce and the higher priced imports. We expect continued but gradual depreciation of the naira in the coming weeks as FX demand increases. 

Compiled by Ikenga Kalu

Further reading: 
The Punch – Rice Processors Blame Insecurity, Inflation for High Cost of Food Commodity 

The Punch – Nigeria’s 96% revenue used to service debt in 2022 

Ghanaian Cedi (GH¢)

The Ghanaian cedi traded from 11.63 at the close of last week to 11.99, eroding gains of the previous two weeks, amid a spike in demand for the U.S. dollar. Annual inflation fell to 43.7% in the month of March compared to 50.8% in February. Meanwhile, GDP for the last quarter of 2022 rose 3.7%, higher than the 2.6% projected by analysts, supported by the mining activities. The World Bank also committed to offering $250 million as part of a $1.5 billion Ghana stability fund aimed at assisting banks and investors affected by the domestic exchange program. These funds would ease pressure on the cedi in the long term.

Compiled by Murega Mungai

Further reading:  

Myjoyonline – Producer Price Inflation falls to 43.7% in March 2023
Bloomberg – Mining Propels Ghana to Beat Growth Estimates in Fourth Quarter
Myjoyonline – World Bank commits $250m to Ghana Stability Fund

South African Rand (R) 

The South African Rand opened the new week trading at 18.1038, strengthening from last week’s open of 18.2072. The USD/ZAR briefly tested the 18.00-18.05 support area on Monday, and again on Wednesday – where it is currently trading around 18.02 at the time of writing.

Inflation data released on Wednesday showed that year on year (YoY) inflation jumped to 7.1% in March, while month on month (MoM) inflation moved up 0.1% from 7% in February .Of particular concern is that over the past year, we have seen a 14% YoY surge in food prices.

This has in turn led to renewed speculation that the South African Reserve Bank will once again hike rates at next month’s MPC meeting. The markets are now pricing in a 25 basis-point hike, with some analysts saying that a 50bp hike is possible.

From a global perspective, the U.S. dollar index continues to trade between 101-102 levels (same as last week), indicating a somewhat subdued USD for the time being, providing some protection for a break beyond the 18.50 level for the USD/ZAR.

Looking at the week ahead, we largely expect the ZAR to continue trading in the 18.00 – 18.40 levels against the U.S. dollar. That being said, a break and close below the 18.00 level, would mean that the next major support area to watch is 17.75. In the near term, concern about the domestic economy renders the rand unlikely to fully capitalize on modest dollar demand.

Further reading:  

News24 – Traders raise South Africa rate-hike bets as inflation quickens
Business tech – South Africa forecast: Gloomy with a high chance of recession

Egyptian Pound (EGP)

​​The Egyptian pound opened the new week trading at 30.9000, weakening from last week’s opening at 30.8500. At the time of writing, it has moved back towards the 30.85 levels. The annual urban inflation rate in Egypt rose to 32.7% in March, which is slightly below market forecasts of 33.6%. The biggest upward pressure was on food and non-alcoholic beverages, which had the biggest impact on the consumer price index basket. Core annual inflation eased to 39.50% in March, marginally down from 40.30% in February. 

The pound has been trading at record lows due to fears of a fourth devaluation by the country’s central bank. The International Monetary Fund’s loan to Egypt was conditioned on a shift to a flexible exchange rate regime and monetary policy aimed at gradually reducing inflation. So far this year, the currency has lost almost 20% against the U.S. dollar. With the increasing inflation rate, we expect the USD/EGP levels to trade between 30.90 and 30.95 in the week ahead.

Compiled by Yashveer Singh

Further reading:  

Reuters – Egypt inflation seen hitting all-time high in March

Bloomberg – Egypt Devaluation Calls Grow Louder

Kenyan Shilling (KSh)

The Kenyan shilling weakened from 134.60 at the close of last week to 135.18 this week as demand for hard currencies outweighed supply in the market amid pressure on the country’s debt service obligations. The IMF urged the Kenyan and other sub-Saharan central banks to let their currencies depreciate so as to support local production and spur growth of exports. The IMF emphasised taming inflation by tightening monetary policy, encouraging capital inflows and implementing austerity measures to ease the growth of debt. As dollar demand continues to increase, we project sustained pressure on the shilling in the near term.

Compiled by Terry Karanja

Further reading:  

Business daily – Why IMF wants CBK to let the shilling depreciate

Ugandan Shilling (USh)

The Ugandan Shilling traded at 3,737.00 against the U.S. dollar, up 0.32% from last week. In the previous four weeks, USDUGX gained 0.45%. The Ugandan economy grew 6.8% in the first six months of the 2022/23 fiscal year to the end of June, up from 3.7% in the same period the previous fiscal year,  the Finance Ministry reported on Monday. Services, agriculture, forestry and fishing were the main drivers of growth. The East African country is on track to achieve 5.3% growth for the full fiscal year, thanks to lower inflationary pressures, according to the Finance Ministry. Uganda intends to begin pumping crude oil from fields in the country’s west near the border with the Democratic Republic of the Congo in 2025, with the hope of boosting economic growth to more than 7%.

Looking ahead, firms are confident that output will continue to rise over the next 12 months, bolstered by predictions of continued improvements in customer demand. Looking ahead, we expect the USD/UGX rate to be around 3,763.00 by the end of this quarter and 3,879.00 in a year.

Compiled by Yadhav Panday

Further reading:  

Zawya – Uganda’s GDP grows 6.8% in first half of 2022/23 fiscal year

Tanzanian Shilling (TSh)

The Tanzanian shilling weakened to its lowest level against the U.S. dollar since March 2019 at USD/TZS 2,348 on Monday. This compares with levels around 2,340 in recent weeks. Despite the level, the currency pair remains relatively stable and controlled, moving between 2,344 and 2,348. The bid and offer rates for USD/TZS are currently at 2,341 and 2,351, respectively.

The weakening is despite positive news this past week. The Dar es Salaam stock exchange reported its strongest gains of the month this week, which is mostly owed to the rise of stock prices at three local companies. Tanzania signed contracts worth $667 million with companies in Australia for the mining of graphite and rare earth minerals in the past week. This deal will give a significant bump to the country’s future GDP figures. Some investors predict that Tanzania’s economy will be larger than Kenya’s in 10 years.

With mostly positive news coming from Tanzania, we expect the shilling to maintain current levels, trading between USD/TZS 2,345 and 2348 in the week ahead, possibly gaining some strength and moving back towards 2,342.

Compiled by Kristin Van Helsdingen

Further reading:  

IPPmedia – DSE indices start the week on high notes

The East African -Tanzania, Australia firms sign $667m deal to mine rare earths

The Citizen – What Sh1.5 trillion pacts herald for Tanzania’s economy

The Citizen – Tanzania to overtake Kenya as East Africa’s largest economy in 10 years

West African CFA Franc Region (XOF) 

To deal with the liquidity shortage preventing states from raising financing on the securities markets, the central bank has suspended the standard limit on holdings of securities by banks. This decision had an immediate impact on the securities market. The market operations that took place between April 12- 14 were a success compared to previous issues. Burkina Faso, Niger and Senegal raised XOF 110 billion out of a total amount of XOF 177 billion offered, representing a coverage rate of 161%.

Let’s hope that the dynamism sparked by this decision can be maintained so that the securities market can continue to fulfil its function as a state financing instrument.

Compiled by Jean Cédric Nando KOUA

Further reading:  

Sika finance – UMOA-Titres/Week of April 10: The market regains its dynamism thanks to the boost from the BCEAO

Sika finance – UMOA/Liquidity crisis: BCEAO to the rescue of States

Central African CFA Franc Region (XAF)

The central bank announced in its March monetary policy report that foreign exchange reserves stood at XAF 6,771.3 billion in January. This represents an increase of 43% compared to January 2022 and is equivalent 3.9 months of imports of goods and services. The increase stems from a rise in oil prices and, above all, by increased retrocession of currencies by mining and oil companies. Indeed, the central bank has reduced the rate of retrocession of foreign currencies from mining and oil companies to 35% against 70% for other economic operators, which allowed the immediate recovery of 500 billion XAF. This rate should gradually change. According to the central bank forecasts, foreign exchange reserves should increase by 11% by the end of 2023.

Compiled by Jean Cédric Nando KOUA

Further reading:  

Investir au Cameroun – CEMAC: foreign exchange reserves jump by 43% thanks in particular to the repatriation of extractive companies


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.