General News / East-West Synergy

FRONTIER AFRICA REPORTS: Currency Updates – Eco; KES; Uganda & Tanzania Shilling

Eco takes step closer to reality
The Eco currency took a further step towards becoming a reality, with France beginning a transfer of 5 billion Euros to the Banque Centrale des États de l’Afrique de l’Ouest in support of reforms for the currency in the XOF region. France’s minister of finance assured that the reforms would be implemented to the fullest and will support autonomy to countries in the region to invest in financial institutions and instruments of their choice, with France no longer keeping the reserve accounts.

Horticulture lifting Kenyan Shilling
The Kenyan Shilling strengthened to KSh 107/107.30 per dollar amid lower imports along with increases in tea and horticultural exports, and remittance receipts. Kenya’s Bureau of Standards reported that inflation in April dropped to 5.76% from 5.9% in March, driven by lower food costs. New Export Trade programme (NExT), a European Union funded project that started a year ago, will invest €5 million (Sh650 million) in Kenya’s horticultural sector. The programme is aimed at increasing the contribution from the horticultural sector to household income through employment opportunities and foreign currency earnings. We expect continued support from investment to support further gains in the Shilling.

Uganda inflows boost Shilling 
The Ugandan Shilling appreciated to 3560/3570 levels this week, driven by offshore and month-end nongovernmental organisation (NGO) inflows into the country. The April monetary policy report from the Bank of Uganda predicted the economy will grow 3-3.5% in the financial year 2020/21, rising to 4-4.5% for 2021/22 and 6-7% in subsequent years. We expect inflows from the agricultural sector and investments will keep the Ugandan Shilling strengthening in the near term

Gold support for Tanzanian Shilling
Tanzania’s Shilling traded steadily at the same levels as last week’s close, at 2310/2324. On Monday, the government issued a new travel advisory and 14 measures aiming at controlling Covid-19 pandemic. President Samia Suluhu Hassan is using a visit to Kenya and bilateral talks with President Uhuru Kenyatta to promote investment and trade. According to the Bank of Tanzania, the value of gold exports increased to $3.025 billion in the year ending March 31, from $2.324 billion previously. Exports including gold are likely to continue supporting the Shilling at current levels near term.


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