African currencies suffer amidst COVID-19 pandemic, forex scarcity - BLUEPRINT
Several African countries local currency, including Nigeria’s Naira, have not been spared as the spread of the deadly COVID-19 lockdown causes investors to dump riskier assets and the Dollar to surge.
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.
Findings by global rating agencies shows that South Africa’s Rand, Nigeria’s Naira, Ghana Cedi, Kenyan Shilling, Tunisian Dinar, Morocco’s Dirham, and the West African Monetary Union’s CFA franc have all fallen to record low as a result of the pandemic.
According to research conducted by United Capital Research, huge capital flow reversal driven by risk-off sentiment, shows that the S/African rand is the worst hit, down by 20.6 per cent Year-to-Date (YTD).
This is followed by the Angolan Kwanza which has depreciated by 16.1 per cent YTD. Mauritius Rupee (-8.8 per cent YTD), Nigerian Naira (-6.6 per cent) and Kenyan Shilling (-5.3 per cent YTD) followed in that order.
Others include the Tunisian Dinar (-3.8 per cent YTD), Morocco’s Dirham (-2.7 per cent YTD) and the West African Monetary Union’s CFA franc (-2.3 per cent YTD).
The Kenyan shilling was one of East Africa’s most stable currencies, until recently. It reached a record low this week and while it’s recovered in the past two days, it’s still down 3.6 per cent this year.