South African Rand Leads Laggards

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.


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Inflation Report – May 23rd

Rate Announcement – May 23rd



Report – May 27th



Interest Rate – May 27th



Inflation Report –  May 23rd



Mining Production YoY –  May

Apr-2020 Inflation Report – May 27th



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