Sub-Sahara African Currencies Outlook in H2-19: …to mirror H1-19?

Proshare

Friday, July 19, 2019   / 05:00PM / United Capital Research / Header Image Credit: iStock

 

Analysis of SSA’s foreign exchange condition showed that the performance was broadly divergent in H1-19. However, contrary to the broad base decline seen in 2018, the dovish global monetary policy stance provided support for some currencies in region in H1-19. 

Despite a weak macroeconomic condition in South Africa and Nigeria, the rand and the naira strengthened against the US dollar, thanks to increased Foreign Portfolio Investment (FPI) inflows during the period. FPIs flows was driven by investors seeking alpha returns in high yielding Emerging Market (EM) assets. Contrariwise, the Ghanaian cedi (GHC) was the worst performer among the currencies within our coverage as a surprise 100bps rate cut by the Bank of Ghana in Jan-19 and a further indication of policy easing sent the currency southwards. 

We expect currencies in SSA to follow the trend observed in H1-19. In Nigeria and South Africa, barring any external shocks, we expect the naira and rand to remain relatively stable. This will be buoyed by a sustained FX intervention and continued FPI inflows. In the CFA franc zones (WEAMU and CEMAC), we see further weakening in the CFA franc as BREXIT uncertainty continues into H2-19, given that the currencies are pegged to the euro. Similarly, we expect the pressure on the Ghanaian cedi (GHC) and Kenyan shilling (KES) to continue into H2-19 amid rising current account deficits. 

 

Top African Stories

• South Africa cuts rates as economy weak, inflation steady: The South African central bank cut its main lending rate by 25 basis points to 6.50%, as expected, citing weak economic growth and inflation which has stayed around the midpoint of its target range. Reuters

 

• Egypt says its economy on right track after 5.6% growth in 2018/19: Egypt’s economy grew 5.6% in the 2018/19 fiscal year and is “on the right track” as it completes IMF-backed reforms, Prime Minister Mustafa Madbouli said this week. Reuters

 

• Tanzania may review 2018 GDP figure after lower World Bank estimate: Tanzania’s statistics agency said on Thursday it may review its economic growth figure for 2018 after the World Bank came up with a significantly lower one. Reuters

 

• Nigeria's state oil firm awards oil-for-fuel swap deals:  Nigerian state oil firm NNPC issued award letters on Monday for highly sought-after contracts to exchange crude oil for imported fuel, oil industry sources told Reuters. Reuters

 

• Zambia dollar bonds soar after president swaps finance minister:  Zambia’s dollar-denominated government bonds jumped after the country’s president sacked Finance Minister Margaret Mwanakatwe and appointed central bank deputy governor Bwalya Ng’andu to replace her. Reuters

 

• Ghana Stocks Head for 21-Month Low as Banking Concerns Linger: Ghana stocks headed for the lowest in 21 months as investors sold shares to free up cash as they contend with the fallout from banking reforms in the West African nation. Bloomberg

 

 

Looking Forward

Angola

Jun-19 (CPI) Inflation - July 20th

Policy Rate Decision - July 26th

 

Egypt

May-19 Production Index - July 22nd

 

Ghana

Policy Rate Decision - July 22nd 

 

Kenya

Policy Rate Decision - July 24th

Jul-19 (CPI) Inflation - July 31st

 

Morocco

Jun-19 (CPI) Inflation - July 22nd

 

Nigeria

Policy Rate Decision - July 23rd

 

South Africa

Jun-19 Inflation - July 24th

Q2-19 Unemployment Report - July 30th

Jun-19 Trade Balance - July 31st

 

Tunisia

Policy Rate Decision - August 18th

 

 

Visit African Markets in Proshare MARKETS

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Related News

1.       Fed Will Only Cut Rates Once in 2019 – Fitch

2.      Frontier Economies See Lower Interest Rates

3.      In the Footsteps of Nigeria, South Africa Reappoints Apex Bank Governor

4.      Bank of England Publishes July 2019 Financial Stability Report

5.      Turkey Ousts Central Bank Chief Who Drew Ire for Holding Rates

6.      Is the West Africa Single Currency Ambition Feasible?

7.      The Sub-Saharan Africa Region

8.     Kenya joins the Group of Oil Producing Countries in Africa

9.      Moody’s Downgrades the Democratic Republic of Congo’s Rating to Caa1

10.  Remarks By President Donald Tusk After The Euro Summit Meeting On 21 June 2019

11.   South Africa’s Q1-19 GDP Result: On the Way to Another Recession?

12.  Togo Gets S and P’s ‘B and B’ Rating: To Join The Eurobond Bandwagon?

13.  South Africa's Rand Continues To Tumble On Central Bank Worries

14.  South Africa’s Economic Slump-A Huge Signal for Structural Reforms

15.   No-Deal Brexit More Likely; Path Ahead Remains Unclear

16.  Cabinet reshuffling in South Africa: Any lesson for Nigeria?

17.   London Cedes World’s Financial Centre Status To New York As Brexit Worries Weigh On The City

18.  The USA-ChinaTrade War – A Ploy To Colonise China?

19.  BMW, Daimler Most at Risk of US Tariff Rise, China Reprisal

20. New Tariffs Would Signal Prolonged US Corporate Headwind


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP