Naira Stabilizes, Birr Slumps, Shilling Rises

Here’s this week’s overview of the Nigerian Naira, Kenyan Shilling, and South African Rand:

Nigerian Naira

The Nigerian Naira weakened by 0.75% against USD last week to trade at 1591 to the Dollar and is showing some stabilisation around the 1600 versus the US Dollar in recent months.

Nigeria's central bank said on Tuesday that it recorded an increase in remittance inflows reaching $553 million in July, a 130% rise from July 2023.

Central Bank of Nigeria (CBN) spokesperson Hakama Sidi Ali said the figure represented the highest monthly inflow on record and reflected ongoing efforts to enhance liquidity in Nigeria's foreign exchange market.

The surge in remittances was due to measures such as granting licenses to new international money transfer operators (IMTOs), introducing a willing-buyer / willing-seller model, and timely access to naira liquidity for the IMTOs, Sidi Ali said in a statement.

Ethiopian Birr 

Ethiopian Birr weakened by a further 5.5% last week following its recent devaluation and moves to a managed float of the currency. The Birr traded at 109.51 against the dollar at close of trade on Friday.

More volatility is expected in the short term as banks and importers attempt to adjust to the new currency regime, with the hope being that exporters will soon take advantage of the new cheaper Birr and bring much needed foreign currency into the country.

Kenyan Shilling

Kenyan Shilling gained against the dollar last week to trade at 128.5 on Friday. There were no data releases of note out of Kenya last week.

South African Rand

South African Rand gained by 0.5% against the Dollar last week to trade at 17.67 on Friday. We have noted in recent months the potential for the Rand to realise the potential gains it missed out on in 2023 due to its public spat with the US over arms sales to Russia.

The central bank looks set to cut interest rates for the first time in 2 years in September to 8%, but with inflation still at 4.6% there is still a way to go in the battle against price pressures, with futures markets pricing in a widening interest rate differential to the US Dollar.