Currency Markets in Africa: Ghana Now The Star Of The Region

Friday, February 28, 2020 / 5:28 PM / UnitedCapital Research / Header Image Credit: Shutterstock

Analysisof Pan African foreign exchange condition showed that the performance was mixedin 2019. Over the review period, local currencies in Egypt (+11.7%), Tunisia(+7.7%), South Africa (+2.4%) and Kenya (+0.4%) strengthened, against the USdollar, thanks increased Foreign Portfolio Investment (FPI) inflows. On theother hand, local currencies in Angola (-36.0%), Ghana (-14.0%) and Mauritius(-5.6%) weakened against the greenback. Meanwhile, a continued intervention bythe Central Bank of Nigeria kept the naira largely stable through 2019.

Notably,Egyptian pound benefited from the dividend of recent reforms as well asincreasing stability which continue to buoy inflows from tourism. Also, theSouth African rand shrugged-off a raft of negatives headlines, notably thefaltering momentum in the economy, the risk of a credit-rating downgrade tojunk, and a failing state-owned electricity company. On the contrary, theAngolan kwanza suffered from the Central Bank's continued control measures onthe exchange rate since abandoning the peg to the USD in Jan-18.

Thusfar in 2020, the Ghanaian cedi have strengthened up to 7.0% against thegreenback, emerging as the best performer in 2020. The strong performance wasbuoyed by the country's attractive growth story, an above 10.0% real yields atthe local bond market as well as a successful Eurobond issuance in Feb-2020.Meanwhile, currencies across other SSA countries under our watch have weakenedagainst the dollar with South Africa being the worst performer as global riskcontinues to rise amid the outbreak of Coronavirus which have weighed oncommodity prices which account for the bulk of export earnings. Also, weakeconomic structure in some countries and regulatory uncertainties in othersremains a headwind to currency performance in 2020.

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LookingForward

Angola

Feb-2020 Net Reserves - March 15th

Ghana

Feb-2020 Gross Reserves - March 16th

Kenya

Jan-2020 Money Supply - March 12th

Mar-2020 Benchmark Interest Rate - March 19th

Mauritius

Mar-2020 Interest Rate - March 13th

Morocco

Jan-2020 Money Supply - February 28th