{"id":3806,"date":"2023-08-17T00:00:00","date_gmt":"2023-08-17T00:00:00","guid":{"rendered":"https:\/\/staging.azafinance.com\/2023\/08\/17\/strong-dollar-helps-force-depreciation-of-the-cedi-external-factors-influencing-rand-value\/"},"modified":"2023-08-17T00:00:00","modified_gmt":"2023-08-17T00:00:00","slug":"strong-dollar-helps-force-depreciation-of-the-cedi-external-factors-influencing-rand-value","status":"publish","type":"post","link":"https:\/\/azafinance.com\/strong-dollar-helps-force-depreciation-of-the-cedi-external-factors-influencing-rand-value\/","title":{"rendered":"Strong Dollar Helps Force Depreciation Of The Cedi; External Factors Influencing Rand Value","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"<div class=\"infogram-embed\" data-id=\"1p12j7jzj5l51nsmzrr0yxy2dkcxj1q5e7?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 clawed back some gains against the U.S. dollar, climbing from USD\/NGN 930 recorded last week to USD\/NGN 910 this week.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">Petrol marketers have cited their inability to source forex at the Central Bank of Nigeria (CBN) window as the basis for possibly hiking the price of fuel. As a result, the marketers have halted fuel importation because sourcing forex at the substantially higher parallel market rate would make it prohibitive to sell at the government-mandated pump price. The Nigeria Labour Congress threatened to go on strike following hints by petrol marketers that the pump price of fuel might spike to 720 NGN\/liter should the naira continue its wild depreciation. In response, the office of the presidency issued a statement saying it did not expect any further petrol price hike, which essentially calls into question the subsidy removal.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">The acting governor of the central bank has vowed to introduce measures to clamp down on currency speculators in the bid to afford some respite to the falling naira. This prompted a two-day trend reversal which reportedly pushed some offers into the mid USD\/NGN 890 levels. However, questions have been raised regarding the sustainability of this new naira rally.<\/span><\/p>\n<p><span style=\"font-weight: 400\">We expect further appreciation of the naira in the coming days. We may see some profit-taking as the parallel market rate gets close enough to the official market rate, which may curtail the appreciation.<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/punchng.com\/nlc-protests-proposed-fuel-price-hike-threatens-fresh-strike\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Punch \u2014 NLC protests proposed fuel price hike, threatens fresh strike<\/span><\/a><\/p>\n<p><a href=\"https:\/\/thenationonlineng.net\/marketers-stall-petrol-importation-over-forex-unavailability\/#:~:text=The%20inability%20of%20oil%20marketers,(I%20%26%20E)%20window.\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">The Nation \u2014 Marketers stall petrol importation over forex unavailability<\/span><\/a><\/p>\n<p><a href=\"https:\/\/www.thisdaylive.com\/index.php\/2023\/08\/16\/subsidy-is-gone-long-live-fuel-subsidy\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">ThisDay \u2014 Subsidy is Gone! Long Live Fuel Subsidy<\/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\">The U.S. dollar bounced back against the cedi as market levels moved from USD\/GHS 11.2 to 11.375 at the close of the week, with corporate institutions&#8217; requests for forex increasing.<\/span><\/p>\n<p><span style=\"font-weight: 400\">This comes on the back of the increase in the cost of goods and services shown in the inflation rise for July 2023. Also, the Chamber of Petroleum Consumers (COPEC) has sounded an alert on the impending increase in petrol, diesel, and liquefied petroleum gas (LPG) in the coming days. COPEC estimated increases of 5% for petrol\/diesel and 11% for LPG.<\/span><\/p>\n<p><span style=\"font-weight: 400\">We can expect these costs to go higher and a continued depreciation in GHS, given the increase in the dollar.<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/thebftonline.com\/2023\/08\/14\/inflation-outlook-for-august-2023-could-prompt-further-policy-action\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Inflation outlook for August 2023 could prompt further policy action<\/span><\/a><span style=\"font-weight: 400\">\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/citibusinessnews.com\/2023\/08\/petrol-to-sell-at-ghs12-97-diesel-ghs13-43-per-litre-copec\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Petrol to sell at GHS 12.97, diesel GHS 13.43 per liter \u2013 COPEC<\/span><\/a><\/p>\n<p><a href=\"https:\/\/www.bbc.com\/news\/business-52188448\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Petrol prices: Why are they going back up?<\/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 South African rand started the new week at USD\/ZAR 18.9471 before crossing back above the 19 level as of Wednesday afternoon.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">External factors continue to influence the rand as a stronger dollar, combined with ongoing concerns about the Chinese economy, continue to weigh on the rand.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">Domestically, signs of easing on rotational power cuts have seen some analysts forecast major gains for the rand in Q1 2024.<\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><span style=\"font-weight: 400\">Looking at the week ahead, we can expect the rand to continue trading close to 19 against the dollar. Daily resistance is expected around 19.20 to the upside, and support around 18.90. <\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2023-08-16\/rand-seen-getting-a-boost-from-better-south-african-power-supply\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Bloomberg \u2014 Rand Seen Getting a Boost From Better South African Power Supply<\/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 crossed over the psychological resistance level of USD\/EGP 31 this week to trade at USD\/EGP 31.07 on Monday before retreating to 30.95 against the dollar.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">A more flexible pound has been a topic of many discussions especially relating to the International Monetary Fund (IMF) deal that was granted toward the end of last year. The presidency has stated that while it is open to a more flexible exchange rate regime, it needs to protect the citizens. IMF Managing Director Kristalina Georgieva has said that the IMF is engaged in positive talks with the Egyptian government and will lean on the IMF\u2019s expertise to assist the Egyptian government with further privatization of the economy.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">Furthermore, they believe that the Egyptian government can assist in reforming the economy by reducing involvement in economic activities, enhancing subsidies to the most vulnerable citizens, and investigating opportunities to improve Egypt\u2019s foreign exchange reserves.<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.egypttoday.com\/Article\/3\/126314\/Egypt%E2%80%99s-economy-and-IMF-agreement-amid-exchange-rate-uncertainty\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Egypt today \u2013 Egypt\u2019s economy and IMF agreement amid exchange rate uncertainty<\/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 is trading between USD\/KES 143.70\/144.10 which is a drop from 143.20\/143.50 the previous week. The Central Bank of Kenya has left its benchmark lending rate unchanged at 10.5% after noting that the inflation pressures had eased. The Monetary Policy Committee noted that inflation is already within the target band of 2.5% to 7.5%. It was at 7.3% in July and is anticipated to decline further as food inflation is expected to come down. The Committee also noted that inflationary pressures had eased as non-food, non-fuel inflation declined. The impact of the tightening of monetary policy in June 2023 to anchor inflationary expectations was still transmitting in the economy, thus retaining the CBR rate. The usable foreign exchange reserves remained adequate at USD 7,357 million, which is 4.02 months of import cover that meets the CBK\u2019s statutory requirement to maintain at least four months. We expect to see more pressure on the shilling with increased forex demand.<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.businessdailyafrica.com\/bd\/economy\/cbk-holds-the-benchmark-lending-rate-on-inflation-ease--4331746\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">BusinessDaily &#8211; CBK holds the benchmark lending rate on inflation ease<\/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 traded at 3,727 on Wednesday, Aug. 16, 2023, up 0.19% from last Friday. Looking ahead, we expect USD\/UGX to weaken as a result of the Bank of Uganda deciding to reduce its benchmark interest rate to 9.5% from 10%. The move \u2014 an effort to stimulate economic activity after inflation fell below its target \u2014 came during its meeting on Aug. 15. Uganda&#8217;s annual inflation rate fell for the sixth consecutive month in July 2023, to 3.9%, from 4.9% in June; the lowest level since March 2022.<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2023-08-15\/uganda-cuts-rate-for-first-time-in-two-years-on-easing-inflation%20-%20xj4y7vzkg\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Bloomberg &#8211; Uganda Cuts Rates, Vows to Act if World Bank LGBTQ Move Hits FX<\/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 weakened to USD\/TZS 2,505 last week Thursday. This is the weakest level for the shilling against the U.S. dollar since 2017. It has continued trading around this level and is currently at USD\/TZS 2,502. With the shilling nearing its all-time weakest level against the dollar, we expect this to have a knock-on effect as the cost of importing increases the price of products, ultimately causing rising inflation.<\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><span style=\"font-weight: 400\"><br \/>\n<\/span><span style=\"font-weight: 400\">Data released by the Bank of Tanzania showed that non-traditional exports grew by 4.2% in June, year-on-year. The increase was mainly driven by minerals. The total USD value in exports for this period was $12,767.6 million.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">Looking at the week ahead, we can expect the shilling to weaken to around the USD\/TZS 2,510 level, as the uptick in dollar strength will likely keep the shilling under pressure. <\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/dailynews.co.tz\/minerals-services-receipts-drive-up-export-earnings\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Daily news \u2014 Minerals, services receipts drive up export earnings<\/span><\/a><\/p>\n<h3><b>West African CFA Franc Region (XOF)\u00a0<\/b><\/h3>\n<p><i><span style=\"font-weight: 400\">Compiled by Yashveer Singh<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400\">Burkina Faso established the national Society of Precious Substances (SONASP) on Aug. 9, 2023, aiming to enhance profits from gold mining and to promote responsible, sustainable mining practices. This new state-owned company replaces the previous national agency responsible for supervising artisanal and semi-mechanized mining operations. The previous agency, ANEEMAS, was formed in 2015 to oversee gold mining, minimize environmental impacts, improve safety, prevent fraud, and eliminate child labor in the sector. The new company, SONASP, holds expanded responsibilities, including processing, marketing, and mechanization of mining products.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">Specific details of the recent amendments to the mining code made in April 2023 are yet to be disclosed. They are likely to follow a similar path as neighboring Mali, which seeks to increase the mining sector&#8217;s contribution to the economy. Mali adopted a new mining code this month, enabling the government to hold up to 35% interest in mining projects, up from the previous limit of 20% in the 2019 code.<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.sikafinance.com\/marches\/burkina-le-gouvernement-cree-une-societe-pour-mieux-tirer-profit-de-l-exploitation-miniere_42112\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Sikafinance with Burkina: The government creates a company to better profit from mining<\/span><\/a><\/p>\n<h4><b>Central African CFA Franc Region (XAF)<\/b><\/h4>\n<p><i><span style=\"font-weight: 400\">Compiled by Yashveer Singh<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400\">Finance Minister Louis Paul Motaze led a workshop in Bangou, Cameroon, on Aug. 7, 2023, to promote Tresor Pay, a platform designed to collect nontax revenues, including fines, rents, fees, and more. The government has struggled to manage these revenues, collecting CFAF 160 billion in 2021 against a target of CFAF 187.4 billion. The 2023 budget aims for CFAF 250.4 billion from nontax revenues out of an estimated CFAF 800 billion. Tresor Pay seeks to optimize collection to meet this potential, four times the 2023 target.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">The Ministry of Finance has prioritized improving nontax revenue collection due to declining internal revenues and rising state expenses driven by security, debt, and development spending. The outlook for 2024 remains challenging, according to the ministry.<\/span><\/p>\n<p><b>Further reading:\u00a0\u00a0<\/b><\/p>\n<p><a href=\"https:\/\/www.businessincameroon.com\/finance\/0908-13338-cameroon-launches-platform-to-optimize-the-collection-of-non-tax-revenues\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">Business in Cameroon \u2014 Cameroon launches platform to optimize the collection of non-tax revenues<\/span><\/a><\/p>\n<p>\u00a0<\/p>\n<div class=\"entry-content lqd-single-post-content clearfix pos-rel\">\n<div class=\"container\">\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<\/div>\n<\/div>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"excerpt":{"rendered":"<p>Nigerian Naira (\u20a6)\u00a0 Compiled by Ikenga Kalu The naira clawed back some gains against the U.S. dollar, climbing from USD\/NGN 930 recorded last week to USD\/NGN 910 this week.\u00a0 Petrol marketers have cited their inability to source forex at the Central Bank of Nigeria (CBN) window as the basis for possibly hiking the price of [&hellip;]<\/p>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"author":1,"featured_media":3807,"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-3806","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\/3806","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=3806"}],"version-history":[{"count":0,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/posts\/3806\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/media\/3807"}],"wp:attachment":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/media?parent=3806"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/categories?post=3806"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/tags?post=3806"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}