from OKORO CHINEDU in Lagos, Nigeria
Nigeria Office
HARE, (CAJ News) – AFRICAN currencies are forecast to hold steady against the US dollar, marking a significant shift from depreciation in 2023.
Stears, a leading provider of financial data and information, predicts a year of reduced volatility and appreciation for these currencies.
The FX Forecast predicts reduced volatility for African exchange rates throughout 2024 as the gap between US interest rates and emerging market interest rates, particularly in Africa, narrows.
This projected trend is expected to lead to less depreciation, with several African currencies strengthening against the dollar.
“The Nigerian naira, for example, is expected to find stability after a difficult 2023,” said Tokunbo Afikuyomi, Lead Economist at Stears.
The economist emphasized the role of strategic reforms in strengthening specific currencies.
Afikuyomi said despite a difficult start to the year, foreign exchange (FX) reforms aimed at improving dollar liquidity and the expected slowdown in base-effect inflation were key contributing factors.
He expects a “gradual cooling of the market by the third quarter of 2024” for the naira.
Similarly, Ghana is projected to experience a more favorable economic climate in 2024, with expected improvements in growth and inflation.
International Monetary Fund (IMF) reforms are expected to restore confidence in the economy, strengthening Ghana’s CEDI and possible appreciation against the dollar.
Afikuyomi noted that the positive sentiment in the market was also strengthening the Kenyan shilling.
The recent issuance of a $1.5 billion Eurobond on February 12 seems to be causing some optimism.
“Improved dollar liquidity, recent inflows from the IMF and the Central Bank of Kenya’s commitment to intervene in the foreign exchange market are contributing to the positive outlook for the shilling,” Afikuyomi explained.
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Stears’ forecasts reflect a cautiously optimistic view of the stability of African currencies in the face of global economic challenges.
“Expected improvements in core economies and strategic reforms position these currencies for resilience and appreciation,” Afikuyomi said.
The Stears FX forecast includes a variety of currencies displayed on the Africa FX Africa screen, including the Angolan kwanza, Rwandan franc, South African rand and Ugandan shilling.
– CAJ News