{"id":3442,"date":"2020-03-30T00:00:00","date_gmt":"2020-03-30T00:00:00","guid":{"rendered":"https:\/\/staging.azafinance.com\/2020\/03\/30\/no-relief-for-rand-naira-kenya-uganda-intervene-to-maintain-stability\/"},"modified":"2020-03-30T00:00:00","modified_gmt":"2020-03-30T00:00:00","slug":"no-relief-for-rand-naira-kenya-uganda-intervene-to-maintain-stability","status":"publish","type":"post","link":"https:\/\/azafinance.com\/no-relief-for-rand-naira-kenya-uganda-intervene-to-maintain-stability\/","title":{"rendered":"No relief for Rand, Naira; Kenya, Uganda intervene to maintain stability","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n

Moody\u2019s adds to pain amid world\u2019s toughest lockdown<\/strong><\/h2>\n\n\n\n

As South Africa began the world\u2019s toughest coronavirus lockdown (no jogging, no dog walking, no alcohol or cigarette buying), Moody\u2019s delivered its long-anticipated hammer blow, cutting South Africa\u2019s credit ratings to junk status late on Friday. While the downgrade merely brings the agency in line with junk ratings from S&P and Fitch, it could make some investors forced sellers as the country crashes out of benchmark indexes including FTSE\u2019s World Government Bond Index. The Rand slumped 3.7% for the week. We expect further weakening, with the lockdown contributing to a likely 3% contraction in 2020 GDP.<\/p>\n\n\n\n

Naira under pressure after parallel market plunge<\/strong><\/h2>\n\n\n\n

The Naira depreciated 9% in the parallel market towards, hitting 410 per dollar, a week after the CBN lowered its peg to 380 for the Investors and Exporters foreign exchange window. At the same time, the CBN suspended sales of FX to Bureau de Changes as its reserves shrank from $38bn to $35bn due to market interventions. With the price of oil- accounting for 90% of foreign exchange earnings- languishing at less than half of its pre-coronavirus level, the Naira will continue to come under pressure.
<\/p>\n\n\n\n

Kenya throws kitchen sink against coronavirus<\/strong><\/h2>\n\n\n\n

Multiple measures to offset the COVID-19 impact on Kenya\u2019s economy left the shilling under eased pressure, trading 2.4% higher for the week at 104.25. In an effort to boost liquidity, the Central Bank complemented a 100bps rate to 7.25% with an equivalent reduction to the reserves required for lenders, now at 4.25%. Governor Patrick Njoroge meanwhile cautioned that the weakening of the shilling in reaction to the CBK\u2019s expressed intention to buy $100 million every month from commercial banks to restore its FX reserves was misunderstood and in some cases \u201cmalicious.\u201d With cuts to VAT and corporation tax, Kenya\u2019s policymakers have thrown the full kitchen sink of economic measures at coronavirus, but with 2020 GDP growth likely to halve to 3.4% amid reduced demand by the country\u2019s main trading partners, disruptions of supply chains, and domestic production, we foresee continued pressure on the Shilling.<\/p>\n\n\n\n

Ugandan interventions provide shilling brief reprieve<\/strong><\/h2>\n\n\n\n

One of the few currencies to strengthen, the Ugandan shilling climbed 0.54% during the last two days of the week after the Bank of Uganda sold dollars in the interbank market to arrest this year\u2019s 6% depreciation against the dollar. Amid declines in remittances of foreign earnings from the diaspora, Uganda also put pressure on money transfer firms to provide a boost by easing fees. MTN, the largest telco, eliminated some charges on its mobile money platform. Relief is likely to be brief as the coronavirus impact continues to put pressure on the shilling in line with other frontier currencies.<\/p>\n\n\n\n

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Moody\u2019s adds to pain amid world\u2019s toughest lockdown As South Africa began the world\u2019s toughest coronavirus lockdown (no jogging, no dog walking, no alcohol or cigarette buying), Moody\u2019s delivered its long-anticipated hammer blow, cutting South Africa\u2019s credit ratings to junk status late on Friday. While the downgrade merely brings the agency in line with junk […]<\/p>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"author":1,"featured_media":3443,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[19],"tags":[191,203,34,192,193],"class_list":["post-3442","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fx-insights","tag-currency","tag-foreign-e","tag-naira","tag-rand","tag-shilling"],"acf":[],"gt_translate_keys":[{"key":"link","format":"url"}],"_links":{"self":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/posts\/3442","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/comments?post=3442"}],"version-history":[{"count":0,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/posts\/3442\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/media\/3443"}],"wp:attachment":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/media?parent=3442"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/categories?post=3442"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/tags?post=3442"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}