{"id":3647,"date":"2021-10-28T00:00:00","date_gmt":"2021-10-28T00:00:00","guid":{"rendered":"https:\/\/staging.azafinance.com\/2021\/10\/28\/high-fuel-prices-crimp-kenya-reserves-as-nigerias-hit-2-year-high\/"},"modified":"2021-10-28T00:00:00","modified_gmt":"2021-10-28T00:00:00","slug":"high-fuel-prices-crimp-kenya-reserves-as-nigerias-hit-2-year-high","status":"publish","type":"post","link":"https:\/\/azafinance.com\/high-fuel-prices-crimp-kenya-reserves-as-nigerias-hit-2-year-high\/","title":{"rendered":"High fuel prices crimp Kenya reserves as Nigeria\u2019s hit 2-year high","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"

Sudan coup chokes off much-needed funding<\/strong><\/h4>\n

Since Sudan\u2019s military on Monday seized power and arrested the prime minister, the country has suffered widespread violence, demonstrations and property destruction. Sudan has witnessed 17 coup attempts in its history, the most on the continent\u2014five have been successful (not including Monday\u2019s coup). The latest military takeover will put further strain on economic progress in the country, with the US among those suspending aid in response to the coup. The African Union also suspended Sudan from all AU activities until civilian rule is restored. Such responses will crimp inbound investment and choke off much-needed development and infrastructure project funding, damaging the economy and weakening growth.<\/p>\n

Nigeria FX reserves at two-year high to steady Naira<\/strong><\/h4>\n

The Naira was little changed on the unofficial market this week, trading at around 570 to the dollar. Amid sustained higher oil export prices, the country\u2019s FX reserves rose again, hitting a roughly two-year high of $41.5bn, according to the central bank\u2019s 30-day moving average benchmark. Nigeria also this week officially launched its digital currency, the e-Naira, after being delayed amid a claim against the central bank for trademark infringement. The bank\u2019s Governor Godwin Emefiele says the e-Naira will boost financial inclusion, reduce the cost of processing cash and enable transparent welfare payments to eligible citizens. We expect the Naira to continue trading around the 570 handle in the near term.<\/p>\n

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Cedi strains to ease on African Development Bank loan<\/strong><\/h4>\n

The Cedi depreciated slightly against the dollar this week, slipping to 6.103 from 6.08 at last week\u2019s close despite the Bank of Ghana\u2019s recent interventions to ease pressure on the currency through its forward FX auctions. Rising borrowing costs and investor preference for dollar-denominated securities have heaped further strain on the Cedi, though we expect that pressure to begin to recede in the near term following the approval of a $75m loan from the African Development Bank to the Ghana Infrastructure Investment Fund, which will help boost dollar supply.<\/p>\n

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Power cuts dim Rand outlook amid commodity retreat\u00a0<\/strong><\/h4>\n

The Rand depreciated against the dollar this week, trading at 14.84 compared to 14.75 at last week\u2019s close on the back of declining commodity prices, particularly precious metals. The country\u2019s economy is also facing crippling electricity-supply problems, with state-owned energy company Eskom announcing a series of planned power cuts this week. With global risk sentiment remaining mixed, the retreat in commodity prices and the country\u2019s power issues could spell further weakening for the Rand in the coming days.<\/p>\n

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\nUpbeat Egypt credit outlook to keep Pound steady<\/strong><\/h4>\n

The Pound was unchanged against the dollar this week, trading at 15.66\/15.76 after credit rating agency Standard & Poor\u2019s affirmed Egypt\u2019s sovereign rating at B for the fourth time since the start of the pandemic. The agency praised the country for its flexible and balanced policy framework to deal with the pandemic, along with the implementation of economic and structural reforms. We expect the Pound to remain stable over the coming week.<\/p>\n

High fuel prices crimp Kenyan FX reserves as Shilling slides<\/strong><\/h4>\n

The Shilling weakened again this week, slipping to 111\/111.2 from 110.95\/111.15 amid continued dollar shortages, exacerbated by increased demand from oil and merchandise importers and rising inflation, especially fuel prices. That demand has seen FX reserves decline as the central bank attempts to ease the pressure on the currency. Reserves fell to\u00a0$9.23bn this week\u00a0from $9.26bn on Oct. 14, sufficient for 5.64 months of import cover. We expect month-end dollar demand to pile even more pressure on the Shilling over the coming week.<\/p>\n

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Bank of Uganda intervention to revive Shilling from 2-month low<\/strong><\/h4>\n

The Shilling was trading at 3550\/3560 this week, clawing back last week\u2019s losses after touching a two-month low of 3635, with offshore dollar demand cited as the main cause. This week\u2019s recovery came after the Bank of Uganda stepped in to shore up the Shilling by selling an undisclosed amount of dollars into the market. We expect that intervention to keep the currency steady over the next seven days.<\/p>\n

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Month-end in balance for stable Tanzanian Shilling\u00a0\u00a0<\/strong><\/h4>\n

The Shilling depreciated slightly this week, trading at 2302\/2312 from 2300\/2310 at last week\u2019s close, with inflows from commodities and NGOs cushioning against a steeper decline amid dollar demand from SMEs, oil companies and manufacturers. We anticipate demand for the greenback will increase as we approach month-end, though we expect that to be offset by increased inflows from agricultural commodities and investors, thus keeping the Shilling stable.<\/p>\n

<\/p>\n

Sign Up\u00a0Here<\/a>\u00a0To Receive Weekly FX Insights From Us!<\/h5>\n

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.<\/em><\/p>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"excerpt":{"rendered":"

Sudan coup chokes off much-needed funding Since Sudan\u2019s military on Monday seized power and arrested the prime minister, the country has suffered widespread violence, demonstrations and property destruction. Sudan has witnessed 17 coup attempts in its history, the most on the continent\u2014five have been successful (not including Monday\u2019s coup). The latest military takeover will put […]<\/p>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"author":1,"featured_media":3648,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[19],"tags":[],"class_list":["post-3647","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fx-insights"],"acf":[],"gt_translate_keys":[{"key":"link","format":"url"}],"_links":{"self":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/posts\/3647","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=3647"}],"version-history":[{"count":0,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/posts\/3647\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/media\/3648"}],"wp:attachment":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/media?parent=3647"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/categories?post=3647"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/tags?post=3647"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}