Africa’s currency recovery lost momentum in September as several major currencies weakened against the US dollar, reversing some of the gains recorded earlier in the year.
The renewed pressure came amid a stronger dollar, rising global oil prices and increased demand for foreign currency in several African economies.
Uganda’s shilling was among the currencies under the most pressure, falling to a record low as energy importers increased their demand for dollars amid higher fuel costs. Ghana’s cedi also weakened, while Zambia’s kwacha faced pressure following a sharp increase in fuel prices. (Reuters)
Naira remains relatively stable
Nigeria’s naira was more resilient during the period, supported by stronger external reserves and improved foreign-exchange liquidity.
The naira traded around N1,329 per dollar in the official market in late September, while Nigeria’s external reserves climbed to about $54.86 billion by September 24, an 18-year high. (Businessday NG)
The stronger reserve position has provided the Central Bank of Nigeria with greater capacity to support the foreign-exchange market and meet the country’s external obligations.
Global pressures weigh on African currencies
The renewed weakness across several African currencies came as the US dollar strengthened globally. The dollar benefited from higher US bond yields and renewed concerns about inflation, while higher energy prices added pressure to countries that rely heavily on fuel imports. (Reuters)
Uganda’s shilling fell to around 3,965–3,975 per dollar in early October, while Ghana’s cedi traded around 11.70 per dollar. Zambia’s kwacha was also vulnerable to further weakness following a 24 percent increase in fuel prices. (Reuters)
Kenya’s shilling, however, remained relatively stable at around 129.45–129.65 per dollar.
The outlook suggests that African currencies could remain sensitive to movements in the US dollar, global oil prices, foreign capital flows and domestic demand for foreign exchange in the coming months.
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Africa’s Currency Recovery Reverses as More Currencies Weaken
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Africa’s currency recovery slowed in September as several currencies weakened against the dollar amid higher oil prices and renewed FX pressures.
