Africa's two largest oil producers have suffered similar losses in their currencies this year as fuel price fluctuations have reduced foreign exchange inflows. The Angolan Kwanza is down about 30% since the beginning of the year against the dollar. For its part, the Nigerian currency, the Naira, is down on the parallel market.

However, the outlook for the two currencies is expected to be divergent as pressure on Angola from rising debt service costs. According to Fitch, the level of Angolan public debt is close to 129% of GDP or 850% of state revenues. The rating agency downgraded Angola from B- to CCC on Friday. "While Angola may turn to multilateral donors and its sovereign wealth fund to meet its obligations this year, we expect sustained pressure on kwanza. Especially since the decline in reserves reduces confidence in the Kwanza," said Michael Nderitu, Chief Risk Officer at AZA, the largest non-bank currency platform in Africa. .

The rise of the Naira slowed down

Meanwhile, the rise in Naira triggered by the resumption of dollar sales by bureaux de change and speculators is reducing dollar positions. With BDC dollar sales insufficient to meet demand, the naira fell to 445 units per dollar in the parallel market from 440 last week. BDCs still have a huge backlog on their foreign exchange obligations, which will continue to put pressure on the Nigerian national currency in the coming days. The Naira is also facing an economic context of declining oil revenues and reserves.

Falling GDP briefly knocks out the Rand

The Rand lost nearly 2% against the dollar, from 16.62 to 16.97, after South Africa's GDP in the second quarter collapsed by 51%. The country's recession appears to be as deep as it is deep, with the majority of sectors recording negative growth over this period. However, the Rand quickly returned to a level of 16.62; it seems that perhaps the most pessimistic signs are behind us, with a quarterly sentiment indicator compiled by the Office for Economic Research at the University of Stellenbosch rising from 5 to 24 in the previous three months, against a median estimate of 8, based on estimates by three economists in a Bloomberg survey. "We expect sustained levels for the Rand in the coming days," said Murega Mungai Trading Desk Manager at AZA.

Sale of Treasury bills in Kenya to reduce dollar requirements

Kenya's shilling edged down against the dollar to 108.55 due to strong demand for dollars from the energy sector. Due to a shortage of dollars in the market, the Shilling was supported by usable foreign exchange reserves declared by the Central Bank of Kenya at $8,865 million, which is equivalent to 5.38 months of import coverage as of September 3, a decrease of $8 million. Further relief is expected on September 16, as foreign investors will subscribe to Treasury bond issues worth 50 billion shillings, boosting the supply of dollars. On Tuesday, the World Bank said Kenya had secured $750 million to expand the economy in projects such as improving the movement of people and goods, digital connectivity and access to social services. Given these dollar inflows, we expect a more stable shilling in the coming days.

The Ugandan Shilling on good prospects

Uganda's Shilling edged down to 3685/3695 due to dollar demand from commercial banks and the energy sector. In its Financial Stability Report, the Bank of Uganda forecasts GDP growth to reach between 3 and 4 percent in the 2020-2021 fiscal year, as high-frequency indicators of economic activity point to a recovery. The Bank of Uganda's outlook will help stabilize the shilling in the short term.

Tanzanian exports up in shilling

Tanzania's Shilling remained stable at levels of 2315/2324.95 (2319.98) compared to 2312.91/2326.91 (2319.90) a week ago. The Bank of Tanzania announced positive news in its Monthly Economic Review (MER) for august, indicating that exports continued to grow as economies around the world reopened after the lockdown measures. Revenues from exports of goods and services amounted to $9815.3 million as at July 31, up from $8,706.6 million in the same period last year. Inflows of horticultural, gold and agricultural products, including sisal, cashew nuts, cotton and cloves, increased due to improved volume and prices. Inflation for August stagnated at 3.3% due to falling prices for basic foodstuffs. "We expect the shilling to remain stable over the coming week," says Terry Karanja Treasury Associate at Aza. On the other hand, the manufacturing sector and the demand for oil importers' dollars is offset by continued agricultural capital inflows.