WTO under Ngozi offers hope for Africa trade; Tanzania Shilling unmoved by election
WTO under Ngozi offers hope for Africa trade
Even in the face of US opposition, the World Trade Organization’s majority support for Nigerian former finance minister Ngozi Okonjo-Iweala as the next Director General marks a potential sea change in the body that sets the rules for global commerce. Final decision, set for Nov. 9, a week after the US election, will set the course for terms of trade negotiations for years to come. A WTO under Ngozi would throw a spotlight on Africa’s plans to build the world’s biggest free trade area through AfCFTA. Her leadership could help reduce reliance on imports that Africa could be producing on home soil, and focus minds on ways to ensure those products Africa exports to the global market fetch fair value. As the world stands united behind Ngozi’s leadership, a new US presidency must surely yield to the overwhelming collective will of nations.
Naira steady as CBN pumps liquidity
The Naira traded steadily as businesses began to normalize after weeks of unrest and the shooting of protestors. The local currency was at 463 against the dollar in the unofficial market, with FX demand staying low as business activities remained below typical levels. The Naira traded at 386 to the dollar in the NAFEX window as the CBN continued to boost liquidity and support the exchange rate. We expect the Naira to sustain current levels through the current Eid holiday, though pressure will build as traders and importers seek to cover month-end obligations.
Rand gains may be shortlived amid risk selloff
The Rand climbed against the dollar this week to 16.30 from a low of 16.43 amid government plans to reconstruct the economy and stimulate activity in key sectors hit hardest by coronavirus. However, global uncertainty with the upcoming US presidential elections and rising coronavirus infections is likely to undo most of the gains. An uptick in volatility for the rand must be expected in coming days.
CBK mitigates month-end pressure for Shilling
The Kenyan Shilling has been on a weakening streak overall this week, trading as low as 109.16 to the dollar amid increased FX demand as major sectors such as energy, manufacturing and retail rush to meet end-of-month import obligations. However, the exchange rate has recovered more recently, trading at 108.80 levels as the Central Bank of Kenya mopped up excess liquidity in the market. We expect the Shilling to come under further pressure as we approach end of the month.
Ugandan Shilling losing ground amid rising liquidity
Uganda’s Shilling weakened to 3738 per dollar from 3731 as demand from importers to meet end-of-month obligations weighed on the currency. Amid a slowdown in economic growth due to coronavirus as well as the locust invasion, money in circulation increased by 24% compared to the previous financial year of 2018/2019, according to an annual report from the Bank of Uganda issued late last week. We are likely to see the local currency weakening further in coming days as similar forces continue to exert pressure.
Tanzania Shilling unmoved by election
Tanzania’s Shilling lost marginally, slipping from 2319 to 2320 to the dollar, even as lingering anxiety over the election slows business activities and investment. Foreign investors have been keeping a lower profile during the election period, with a decrease in foreign inflows expected. Overall, we foresee sustained levels for the currency.