{"id":3710,"date":"2023-02-24T00:00:00","date_gmt":"2023-02-24T00:00:00","guid":{"rendered":"https:\/\/staging.azafinance.com\/2023\/02\/24\/tanzania-gives-the-go-ahead-to-uganda-pipeline\/"},"modified":"2023-02-24T00:00:00","modified_gmt":"2023-02-24T00:00:00","slug":"tanzania-gives-the-go-ahead-to-uganda-pipeline","status":"publish","type":"post","link":"https:\/\/azafinance.com\/tanzania-gives-the-go-ahead-to-uganda-pipeline\/","title":{"rendered":"Tanzania Gives The Go-Ahead To Uganda Pipeline","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"

Forget Nigeria\u2019s election: it\u2019s the Naira shortage that markets are watching<\/span><\/strong><\/h4>\n

As Nigerians prepare to go to the polls on Saturday to elect a new president, a cash shortage caused by a policy to exchange old Naira notes for newly designed bills continues to cripple the economy, creating a rift in the ruling All Progressives Congress (APC) party. The note swap plan championed by incumbent President Muhammadu Buhari has led to violent protests across the country and resulted in a temporary suspension of banking operations in some states. Several governors have petitioned the Supreme Court to overturn the policy, citing severe hardship faced by people and businesses dependent on cash for survival. Buhari\u2019s apparent intention behind the policy is to curb vote buying by politicians, turning a deaf ear to APC governors who have made repeated calls to postpone the implementation of the policy. Amid fears of the current tensions spilling over to political violence, Buhari said he\u2019s mobilising military and security agents to monitor polling stations for evidence of vote rigging. The severe cash shortage has held the currency steady despite the economic turmoil, with the Naira strengthening marginally against the dollar to 755 from 756 at last week\u2019s close. In this context, resolving the cash shortage has become more significant for the Naira outlook than the election result\u2014with the rate likely to hold around current levels until Naira supplies recover.<\/span><\/p>\n

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\"Naira_Rate_February_2022_February_2023_png\"<\/p>\n

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Ghana\u2019s latest ratings downgrade drives Cedi lower<\/span><\/strong><\/h4>\n

The Cedi weakened against the dollar, trading at 12.76 from 12.38 at last week\u2019s close as Fitch Ratings cut Ghana\u2019s foreign currency credit rating to \u2018restricted default\u2019 after the country missed a $40.6m coupon payment on one of its outstanding Eurobonds. The downgrade aligns with Fitch\u2019s local currency rating, which was cut earlier this month. The foreign debt default was largely expected after Ghana said it would suspend payments on certain bonds as part of its restructuring plan to unlock $3bn in emergency funding from the IMF. The country faces pushback from bondholders over preferential treatment for bilateral lenders, who are offered better terms in the debt restructuring. Against this backdrop\u2014with inflation remaining elevated despite a slight improvement in January\u2014we expect the Cedi to depreciate further in the near term.<\/span><\/p>\n

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\"Cedi_Rate_February_2022_February_2023_png\"<\/p>\n

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Rand sinks to lowest in more than 3 months\u00a0\u00a0<\/span><\/strong><\/h4>\n

The Rand depreciated against the dollar, trading at 18.25 from 18.05 at last Friday\u2019s close\u2014its weakest level since early November. The currency is being dragged lower by broad risk-off sentiment globally and ongoing domestic concerns about the electricity crisis. To ease concerns about Eskom\u2019s finances, South Africa\u2019s government said it would take on more than half of the power company\u2019s debt over the next three years to help strengthen the balance sheet and avoid the risk of default. We expect the Rand to continue trading with an 18 handle in the near term, mainly due to the risk-off mood that is impacting emerging markets FX.<\/span><\/p>\n

\"Rand_Rate_February_2022_February_2023_png\"<\/p>\n

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Egypt issues debut $1.5bn sukuk<\/span><\/strong><\/h4>\n

The Pound depreciated against the dollar, trading at 30.60 from 30.48 at last week\u2019s close, amid broader risk-off sentiment and a stronger dollar. This week, Egypt issued its debut Islamic finance bond, or sukuk, raising $1.5bn. The three-year deal is priced to yield 11%, having attracted investor demand of more than $5bn. The deal provides some relief to Egypt\u2019s finance ministry, given the country\u2019s need to boost FX inflows and repay existing debt. We expect the Pound to depreciate further in the week ahead due to dollar strength.\u00a0<\/span><\/p>\n

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\"Egyptian_Pound_Rate_February_2022_February_2023_png\"<\/p>\n

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Kenyan Shilling hits new low as FX reserves dwindle<\/span><\/strong><\/h4>\n

The Shilling weakened to a fresh low against the dollar, trading at 126.15 from 125.90 at last week\u2019s close amid increased FX demand from the oil and energy sector. The currency has now lost over 2% of its value this year. Kenya\u2019s foreign currency reserves dropped to a new record low of $6.88bn from $6.94bn the previous week. There are signs of recovery in FX flows: Kenya secured a $27m funding deal with the European Union to boost exports to the 27-nation bloc and strengthen the overall business environment. The government is also anticipating $3.4bn in tourism-related earnings this year as it expects tourist numbers to exceed pre-pandemic levels. In the immediate term, however, we expect the Shilling to remain under pressure as importers clamour for dollars to meet month-end obligations.<\/span><\/p>\n

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\"Kenyan_Shilling_Rate_February_2022_February_2023_png\"<\/p>\n

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Ugandan austerity plan pushes Shilling lower<\/span><\/strong><\/h4>\n

The Shilling depreciated against the dollar, trading at 3700 from 3671 at last week\u2019s close amid concerns about the country\u2019s finances. Uganda\u2019s government announced a raft of austerity measures to help ease its budget pressures and reverse the rising debt servicing burden, including imposing a freeze on new government hires and pay rises. Uganda will also limit foreign travel for officials and won\u2019t take on any new loans in the next financial year at least to help cut debt costs. Given tighter budgetary conditions and ongoing inflationary pressures weighing on the cost of living, we expect the Shilling to weaken in the near term.\u00a0<\/span><\/p>\n

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\"Ugandan_Shilling_Rate_February_2022_February_2023_png\"<\/p>\n

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Tanzania gives the go-ahead to Uganda pipeline<\/span><\/strong><\/h4>\n

The Shilling was marginally weaker against the dollar, trading at 2341 from 2340 at last week\u2019s close. Tanzania\u2019s government this week gave the green light to the construction of a $3.5bn oil pipeline transporting crude from Uganda to the port of Tanga for export in the face of opposition over its potential environmental impact. French oil company TotalEnergies, the Uganda National Oil Company and the China National Offshore Oil Corporation back the project. We expect the Shilling to continue trading around current levels near term.\u00a0<\/span><\/p>\n

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\"Tanzanian_Shilling_Rate_February_2022_February_2023_png\"<\/p>\n

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West African central bank reserves drop 19%<\/span><\/strong><\/h4>\n

The Central Bank of West African States reported significant declines in FX reserves for the end of 2022 as soaring global inflation drove up the cost of energy and food imports. FX reserves fell by almost a fifth to XOF11tr from just over XOF14tr at the end of 2021. That is sufficient for 4.4 months of imports\u2014below the central bank\u2019s target of six months of import cover. C\u00f4te d\u2019Ivoire, Burkina Faso, Niger and Senegal raised a combined XOF144.17bn in their latest bond auction, less than the XOF170bn targeted. Some bids were rejected following the central bank\u2019s move last week to raise its Covid-era borrowing rate. C\u00f4te d\u2019Ivoire borrowed for one year at an average yield of 4.71%, Burkina Faso for five years at 6.85%, Niger for seven years at 8.85% and Senegal for three years at 6.93%.<\/span><\/p>\n

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\"USD_XOF_USD_XAF_Rate_February_2022_February_2023_png\"<\/p>\n

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Cameroon annual inflation at double target<\/span><\/strong><\/h4>\n

Cameroon saw annual inflation hit its highest level in almost three decades at the end of 2022, reaching 6.3%\u2014twice the 3% target for members of the Central African Economic and Monetary Community. Cameroon\u2019s prices have been pushed higher by imported food products and agricultural inputs that Russia\u2019s war in Ukraine has impacted. The country\u2019s statistics agency also cited the XAF\u2019s decline against the dollar for the increased import costs. The XAF had depreciated to 614.46 at the end of 2022 from 579.60 a year earlier. It is currently trading at 616.96.<\/span><\/p>\n

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\"USD_XOF_USD_XAF_Rate_February_2022_February_2023_png\"<\/p>\n

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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":"

Forget Nigeria\u2019s election: it\u2019s the Naira shortage that markets are watching As Nigerians prepare to go to the polls on Saturday to elect a new president, a cash shortage caused by a policy to exchange old Naira notes for newly designed bills continues to cripple the economy, creating a rift in the ruling All Progressives […]<\/p>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[19],"tags":[22,24,25,27,185,29,30,32,298,34,33,303,305],"class_list":["post-3710","post","type-post","status-publish","format-standard","hentry","category-fx-insights","tag-africa-foreign-exchange","tag-cfa-franc","tag-dollars","tag-egyptian-pound","tag-foreign-exchange","tag-fx","tag-fx-insights","tag-ghana-cedi","tag-kenyan-shilling-rate","tag-naira","tag-rand-rate","tag-tanzanian-shilling-rate","tag-ugandan-shilling-rate"],"acf":[],"gt_translate_keys":[{"key":"link","format":"url"}],"_links":{"self":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/posts\/3710","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=3710"}],"version-history":[{"count":0,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/posts\/3710\/revisions"}],"wp:attachment":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/media?parent=3710"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/categories?post=3710"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/tags?post=3710"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}