{"id":3775,"date":"2023-06-16T00:00:00","date_gmt":"2023-06-16T00:00:00","guid":{"rendered":"https:\/\/staging.azafinance.com\/2023\/06\/16\/inflation-crests-40-in-egypt-south-african-rand-rallies\/"},"modified":"2023-06-16T00:00:00","modified_gmt":"2023-06-16T00:00:00","slug":"inflation-crests-40-in-egypt-south-african-rand-rallies","status":"publish","type":"post","link":"https:\/\/azafinance.com\/inflation-crests-40-in-egypt-south-african-rand-rallies\/","title":{"rendered":"Inflation Crests 40% In Egypt, South African Rand Rallies","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"<div class=\"infogram-embed\" data-id=\"1prll92j9g2l71agqjepdvv7kebmyqv5k7l?live\" data-type=\"interactive\"><\/div><script>!function(e,t,s,i){var n=\"InfogramEmbeds\",o=e.getElementsByTagName(\"script\"),d=o[0],r=\/^http:\/.test(e.location)?\"http:\":\"https:\";if(\/^\\\/{2}\/.test(i)&&(i=r+i),window[n]&&window[n].initialized)window[n].process&&window[n].process();else if(!e.getElementById(s)){var a=e.createElement(\"script\");a.async=1,a.id=s,a.src=i,d.parentNode.insertBefore(a,d)}}(document,0,\"infogram-async\",\"\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script>\n<h4><b>Nigerian Naira (\u20a6)\u00a0<\/b><\/h4>\n<p><i><span style=\"font-weight: 400\">Compiled by Ikenga Kalu<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400\">The naira depreciated marginally from USD\/NGN 766 to USD\/NGN 767 over the previous week as the market awaited subsequent signals following the president\u2019s promises of unifying Nigeria\u2019s multiple exchange rate system. On June 14, 2023, news filtered into the market that the Central Bank of Nigeria (CBN) had officially floated the naira, which saw the NGN fall to as low as USD\/NGN 755 from the mid 400 levels in the official market. The CBN had maintained multiple exchange rates for years to cater to different segments of the demand to subsidize access to FX for imports. While this recent devaluation is likely to boost investor confidence in the Nigerian economy, it is also expected to bring higher import costs and increased inflation. We expect demand from the interbank market to trickle into the parallel market and pile further pressure on the naira in the coming weeks.\u00a0<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.premiumtimesng.com\/news\/top-news\/601576-nigerias-dollar-bonds-surge-after-tinubus-plan-to-unify-exchange-rates-scrap-subsidies.html#:~:text=President%20Tinubu%20said%20during%20his,as%20much%2060%20per%20cent.\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Premium Times \u2014 Nigeria\u2019s dollar bonds surge after Tinubu\u2019s plan to unify exchange rates, scrap subsidie<\/span><\/a><span style=\"font-weight: 400\">s<\/span><\/p>\n<p><span style=\"font-weight: 400\">BusinessDay<\/span><a href=\"https:\/\/businessday.ng\/news\/article\/nigeria-officially-floats-naira-as-ie-rate-hits-n755\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\"> \u2014 Nigeria officially floats naira as I&#038;E rate hits N755\/$<\/span><\/a><\/p>\n<h4><b>Ghanaian Cedi (GH\u00a2)<\/b><\/h4>\n<p><i><span style=\"font-weight: 400\">Compiled by Sakina Seidu<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400\">This week, the Ghanaian cedi appreciated from 11.83 to 11.75 following positive sentiment on the back of a recent IMF staff visit. Annual inflation accelerated to 42.2% in May from 41.2% in April as a spike in food costs and recently implemented taxes applied upward pressure on the price of consumer goods. Ghana regained its position from South Africa as the largest gold producer on the continent following a 32% boost in gold production. This was partly a result of the country\u2019s domestic gold purchase program, as well as the expansion of production at the country\u2019s existing mines. In the long term, we expect the extra forex earnings from the increased gold production and positive sentiment from subsequent IMF FX inflows to support the cedi.\u00a0<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.modernghana.com\/news\/1237384\/ghana-tops-africa-with-32-increase-in-gold-produc.html\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Modernghana \u2014 Ghana tops Africa with 32% increase in gold production<\/span><\/a><\/p>\n<p><a href=\"https:\/\/www.bnnbloomberg.ca\/ghana-s-surprise-uptick-in-inflation-may-see-rate-hikes-return-1.1932940\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Bnnbloomberg \u2014 Ghana surprise uptick in inflation<\/span><\/a><\/p>\n<h4><b>South African Rand (R)\u00a0<\/b><\/h4>\n<p><i><span style=\"font-weight: 400\">Compiled by Alex Barmuta<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400\">The USD\/ZAR closed last week at 18.6925, down from last week\u2019s opening of 19.4895. The new week saw the same trend, as momentum carried the rand to the 18.50 levels against the dollar at the time of writing. <\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><span style=\"font-weight: 400\">Some of the contributors towards the rand\u2019s somewhat surprising rally include improved local sentiment, as rotational power cuts eased, and the recent release of better-than-expected GDP data showing South Africa narrowly avoided a recession. That being said, there is no single catalyst to the ZAR rally; many analysts believe that the rand was simply too oversold on the back of the recent concerns around South Africa\u2019s ties to Russia. <\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><span style=\"font-weight: 400\">Looking ahead, a break and close below the 18.40 level could see the USD\/ZAR rate test the 18.10 structure area, followed by the psychological 18.00 level.<\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.moneyweb.co.za\/news\/markets\/rand-back-below-r19-dollar-on-better-sentiment\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Moneyweb \u2014 Rand back below R19\/dollar on better sentiment<\/span><\/a><\/p>\n<h4><b>Egyptian Pound (EGP)<\/b><\/h4>\n<p><i><span style=\"font-weight: 400\">Compiled by Mitchell Diedrick<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400\">The Egyptian pound traded at USD\/EGP 30.89 in midweek trading after closing off last week at USD\/EGP 30.95. Some minor depreciation was observed toward the end of last week before returning to levels below 30.90 that we have seen in recent weeks.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">This week the Egyptian parliament approved the 2023\/2024 budget with an expenditure just under 3 trillion pounds ($95 billion). The government continues to target privatization of state-owned entities to assist with meeting current debt obligations and also seeks investments of $10 billion over the next four years. <\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><span style=\"font-weight: 400\">Worth noting is the increase in expenditure for the food subsidy programme which has risen from 90 billion pounds in 2022\/2023 to 127 billion pounds in 2023\/2024. Egypt continues to face high levels of inflation and is largely reliant on imports for basic food and fuel. Inflation increased from 38.6% in April, 2023 to 40.3% in May, 2023. <\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><span style=\"font-weight: 400\">In the week ahead, we expect the pound to remain relatively stable between USD\/EGP 30.85 and USD\/EGP 30.95.<\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.aljazeera.com\/news\/2023\/6\/14\/egypt-approves-budget-amid-privatisation-drive-economic-crisis\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Aljazeera \u2013 Egypt approves budget amid privatisation drive, economic crisis<\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><\/a><a href=\"https:\/\/www.reuters.com\/world\/africa\/egypts-core-inflation-rises-403-may-2023-06-11\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Reuters \u2013 Egypt&#8217;s core inflation rises to 40.3% in May<\/span><\/a><\/p>\n<h4><b>Kenyan Shilling (KSh)<\/b><\/h4>\n<p><i><span style=\"font-weight: 400\">Compiled by Terry Karanja<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400\">The Kenyan shilling hit a new record low this week of USD\/KES 139.11\/139.80 from last week&#8217;s levels of 138.80 against the dollar. The country remains a net importer, and therefore dollar demand from manufacturers and energy sectors has led to more pressure on the shilling. We expect the inflation rate to increase this month as the cost of food products such as wheat and cooking oil rises. The World Bank expects GDP to grow at 5% in 2023, 0.2 percentage points higher than last year\u2019s increase, signaling a recovery for the economy after the pandemic. The usable foreign exchange reserves increased to $7.532 billion, which is equivalent to 4.15 months of import cover, versus $6.512 billion the previous week, and is attributed to the World Bank loan of $1 billion (139.3 billion Kenyan shillings). We expect the shilling to remain stable in the coming week with the support of the foreign exchange reserves.<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.the-star.co.ke\/business\/kenya\/2023-06-11-more-pressure-on-households-as-shilling-hits-new-record-low\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">The-star \u2014 More pressure on households as shilling hits new record low<\/span><\/a><\/p>\n<h4><b>Ugandan Shilling (USh)<\/b><\/h4>\n<p><i><span style=\"font-weight: 400\">Compiled by Yadhav Panday<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400\">USD\/UGX was trading at 3,710.00 on Wednesday, June 14, 2023, down 5% from last week Friday. The Bank of Uganda maintained its benchmark interest rate at 10% on June 13, 2023, its highest level since 2019, citing the desire to keep policy tight to consolidate the disinflationary process. Uganda&#8217;s annual inflation rate fell for the fourth month in a row to 6.2% in May 2023, down from 8% in April. Uganda&#8217;s economic growth is expected to be in the range of 6% \u2013 6.5% in the fiscal year 2023\/2024, up from an estimated 5.5% \u2013 6.0% in 2022\/2023.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Looking ahead, we expect USD\/UGX to weaken in the coming week as a stable exchange rate and lower food prices helped inflation fall.<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.morningstar.com\/news\/dow-jones\/202306132789\/uganda-central-bank-holds-key-lending-rate-at-10-update\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Morningstar \u2014 Uganda Central Bank Holds Key Lending Rate at 10%<\/span><\/a><\/p>\n<h4><b>Tanzanian Shilling (TSh)<\/b><\/h4>\n<p><i><span style=\"font-weight: 400\">Compiled by Kristin Van Helsdingen<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400\">The Tanzanian shilling continued it&#8217;s weakening trend and closed off last week around USD\/TZS 2,374. This week the shilling weakened even further and is currently trading at USD\/TZS 2,385. The shilling has depreciated 2.3% against the U.S. dollar year to date.<\/span><\/p>\n<p><span style=\"font-weight: 400\">On Friday, June 9, 2023, Fitch Ratings assigned Tanzania a \u201cB+\u201d with its \u201cOutlook Stable\u201d after assessing the country\u2019s macroeconomic position. Fitch expects the country\u2019s real GDP growth to increase from 4.7% in 2022 to 5.2% in 2023 and then to 6% in 2024. Inflationary targets have been met as they have remained below 5% and are expected to remain like this in the medium term. The future potential risks that Fitch has pointed out include the lack of full independence of the central bank as well as the dependence of the country on weather, given the importance of their agriculture sector on their economy.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Despite the positive feedback from Fitch Ratings, we expect the Tanzanian shilling to continue weakening in the week ahead as the shilling finds its position in the market. The country\u2019s reserve bank seems to have let go of its stronghold on controlling the FX rate that was seen in the beginning months of the year. We expect USD\/TZS to be trading around 2,390 in the week ahead.<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.fitchratings.com\/research\/sovereigns\/fitch-assigns-tanzania-b-outlook-stable-09-06-2023\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Fitch Ratings \u2013 Fitch Assigns Tanzania &#8216;B+&#8217;; Outlook Stable<\/span><\/a><\/p>\n<h4><b>West African CFA Franc Region (XOF)<\/b><\/h4>\n<p><i><span style=\"font-weight: 400\">Compiled by Jean C\u00e9dric Nando KOUA<\/span><\/i><b>\u00a0<\/b><\/p>\n<p><span style=\"font-weight: 400\">Senegal recorded an increase in its budgetary resources, which stood at XOF 1,149 billion in April, an increase of 17% since the beginning of the year. <\/span><span style=\"font-weight: 400\">This increase is due to an 11.4% rise in tax revenue, driven mainly by direct taxes, customs duties, and registration fees, which generated an additional XOF 102.3 billion to reach XOF 998.6 billion in April. <\/span><span style=\"font-weight: 400\">Especially noteworthy is the considerable contribution of non-tax revenue, which increased by 78.1% to XOF 86.8 billion. <\/span><span style=\"font-weight: 400\">All these factors have enabled the Senegalese government to reduce the budget deficit.\u00a0<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.sikafinance.com\/marches\/senegal-hausse-de-17-a-1-149-milliards-fcfa-des-ressources-budgetaires-a-fin-avril_41189\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Sika finance \u2013 Senegal: 17% increase to XAF1,149 billion in budgetary resources at the end of April<\/span><\/a><\/p>\n<h4><b>Central African CFA Franc Region (XAF)<\/b><\/h4>\n<p><i><span style=\"font-weight: 400\">Compiled by Jean C\u00e9dric Nando KOUA<\/span><\/i><b>\u00a0<\/b><\/p>\n<p><span style=\"font-weight: 400\">Cameroon has released its oil and gas production. <\/span><span style=\"font-weight: 400\">At the end of April, oil production stood at 8.01 million tons, which represents a drop of 2.2% compared to a year earlier. <\/span><span style=\"font-weight: 400\">However, natural gas production increased by 4.53% to reach 916.01 million m3 in April. <\/span><span style=\"font-weight: 400\">Sales of oil and gas generated XAF 269.22 billion of net revenue, which represents an increase of 31.19% compared to the same period in 2022. <\/span><span style=\"font-weight: 400\">This increase in gas revenues will greatly contribute to reducing Cameroon&#8217;s budget deficit.\u00a0<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.investiraucameroun.com\/mines\/1406-19492-hydrocarbures-baisse-de-la-production-petroliere-2-2-et-embellie-sur-le-gaz-4-5-au-cameroun-a-fin-avril-2023\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Investir au Cameroun \u2013 Hydrocarbons: drop in oil production (-2.2%) and improvement in gas (+4.5%) in Cameroon at the end of April 2023<\/span><\/a><\/p>\n<p>\u00a0<\/p>\n<p><em>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":"<p>Nigerian Naira (\u20a6)\u00a0 Compiled by Ikenga Kalu The naira depreciated marginally from USD\/NGN 766 to USD\/NGN 767 over the previous week as the market awaited subsequent signals following the president\u2019s promises of unifying Nigeria\u2019s multiple exchange rate system. On June 14, 2023, news filtered into the market that the Central Bank of Nigeria (CBN) had [&hellip;]<\/p>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"author":1,"featured_media":3776,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[19],"tags":[22,23,24,25,26,27,185,29,30,31,32,298,34,33,303,305],"class_list":["post-3775","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fx-insights","tag-africa-foreign-exchange","tag-cairo","tag-cfa-franc","tag-dollars","tag-egypt","tag-egyptian-pound","tag-foreign-exchange","tag-fx","tag-fx-insights","tag-ghana","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\/3775","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=3775"}],"version-history":[{"count":0,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/posts\/3775\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/media\/3776"}],"wp:attachment":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/media?parent=3775"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/categories?post=3775"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/tags?post=3775"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}