Currencies in Africa: South African Rand Leads Laggards

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Friday, May 22, 2020 / 3:17 PM / United Capital Research / Header Image Credit: CIO

 

The outbreak of COVID-19 is expected to halt global growth which has maintained a positive trend over the last 10 years.  According to the IMF, the impact of the world-wide lockdown is estimated to result in 3.0% decline in global GDP as the strength of even the most stable economies around the world is put to the test. Unsurprisingly, risk-off sentiment by investors in emerging markets and across African countries in particular as well as the historic downturn in commodity prices , is having a telling impact on currency rates.


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Amid huge capital flow reversal driven by risk-off sentiment, currency rates of African countries under our coverage shows that the S/African rand is the worst hit, down 20.6% YTD. This is followed by the Angolan Kwanza which has depreciated by 16.1%YTD. Mauritius Rupee (-8.8% YTD), Nigerian Naira (-6.6%) and Kenyan Shilling (-5.3%YTD) followed in that order. Others include the Tunisian Dinar (-3.8% YTD), Morocco's Dirham (-2.7% YTD) and the West African Monetary Union's CFA franc (-2.3% YTD). Notably, the Egyptian Pound, up 1.3% YTD, remains the best performer across the region.

 

While an adjustment of the Nigerian naira from N360/$ to N385/$ broadly reflects the 6.6% weakness observed in the official market, it must be noted that currency depreciation at the unofficial market is much deeper, currently at N445/$ amid liquidity challenges in the official market. Looking ahead, the outlook for the local currencies across Africa is expected to remain relatively weak on the back of faltering global demand, weaker commodity prices and slower global trade.

 

Top African Stories

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  • Ghana Banks Head for Lowest Profit Since End of Sector Cleanup: Ghana bank earnings are poised to tumble to the lowest level in more than two years as measures to contain the coronavirus pummel demand for loans and spur a jump in bad debts. Read more

  • South Africa scientists say up to 50,000 COVID-19 deaths possible: South Africa could see up to 50,000 coronavirus deaths and as many as 3 million infections by the end of the year as the southern hemisphere winter leads to a higher rate of infection, scientific models showed on Thursday. Read more

  • Botswana to end 48-day lockdown at midnight: Botswana will end a 48-day lockdown at midnight on Wednesday, allowing all businesses and schools to reopen under strict conditions as it tries to restart an economy hit by the coronavirus pandemic. Read more  

 

Angola

Apr-2020 Inflation Report - May 23rd

Policy Rate Announcement - May 23rd

 

Nigeria 

Q1-GDP Report - May 27th

 

Kenya

Benchmark Interest Rate - May 27th

 

Morocco

Apr-2020 Inflation Report -  May 23rd

 

South Africa

Feb-2020 Mining Production YoY -  May

19th Apr-2020 Inflation Report - May 27th

  

Visit African Markets in Proshare MARKETS

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