NIGERIA INSIGHT: Naira Faces Rocky Future If Abubakar Wins Vote

NIGERIA INSIGHT: Naira Faces Rocky Future If Abubakar Wins Vote

LAGOS (Capital Markets in Africa~) – Nigeria’s opposition presidential candidate Atiku Abubakar, who is running against incumbent Muhammadu Buhari on Feb. 16, has pledged to float the currency. That’s prompted overstated warnings of a devaluation from the central bank governor. But exposing the economy to currency volatility might do more harm than good in the near term. Nigeria’s trade position has deteriorated. Also, the decline in oil savings and foreign reserves would make a free-floating…

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Nedbank Sees Short-Term Rally, Longer-Term Pain for Rand in 2019

Nedbank Sees Short-Term Rally, Longer-Term Pain for Rand in 2019

JOHANNESBURG (Capital Markets in Africa) – The rand’s wild ride isn’t over, according to Nedbank analysts Reezwana Sumad and Walter de Wet. A slowdown in global growth, an escalation in the trade war, an uncertain Brexit and higher global interest rates are just some of the risks the currency will face this year. Nedbank base case sees rand in range of 14-15 per dollar in 2019 From a technical perspective, the USDZAR could rally toward 13 in the…

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South African Rand Gets Cornered in a One-Way Bet as Rate Hike Seen Unlikely

South African Rand Gets Cornered in a One-Way Bet as Rate Hike Seen Unlikely

JOHANNESBURG (Capital Markets in Africa) – One of the biggest differences between central banks in South Africa and Turkey is credibility, according to S&P Global Ratings. But as the rand tumbles to a two-year low amid a broad emerging-market sell-off, that strength is becoming a problem for the currency. The South African Reserve Bank’s policy of targeting inflation and leaving the rand to the markets is making it something of a one-way bet at a time…

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Rand Bears Keep Rushing for the Exits Even as Rate Cut Looms

Rand Bears Keep Rushing for the Exits Even as Rate Cut Looms

JOHANNESBURG (Capital Markets in Africa) – Economists are predicting a South African rate cut on Wednesday. The market’s pricing in another later this year. Rand traders, it seems, couldn’t care less. Bearish bets on South Africa’s currency versus the dollar fell to the lowest level this week since before the 2008 financial crisis, even with the South African Reserve Bank poised to loosen policy while the Federal Reserve tightens, narrowing the rand’s yield advantage over the greenback. A glance…

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Tunisia Can’t Defend the Dinar, Central Bank Governor Says

Tunisia Can’t Defend the Dinar, Central Bank Governor Says

TUNIS (Capital Markets in Africa) – Tunisia can’t defend its currency “even if it wanted to,” and must instead focus on narrowing its trade deficit to revive the economy, according to central bank Governor Marouane El Abassi. El Abassi, in his first news conference since being appointed last month, said the central bank raised its benchmark interest rate by 75 basis points this week to curb inflation, which he said risked becoming “uncontrollable.” The dinar has weakened…

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Rand at a Crossroads as Key Levels to Determine Rally’s Future

Rand at a Crossroads as Key Levels to Determine Rally’s Future

JOHANNESBURG (Capital Markets in Africa) – Some traders are wondering whether the rand’s 20 percent rally since November has gone too far. This week may settle that question. The South African currency has just completed a so-called “golden cross”, signalling an extension of the gains versus the dollar on the back of market-friendly swings in national politics. But it has come up against another hurdle, which it briefly cleared on Tuesday before falling back. Traders may…

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Angola’s Devaluation Is Just the Start as Investors Expect More

Angola’s Devaluation Is Just the Start as Investors Expect More

LUANDA (Capital Markets in Africa) – Angola may have devalued its currency by more than 10 percent, but it will take more than that to end dollar shortages and revive the OPEC member’s battered economy. The kwanza weakened 11 percent to 187.95 per dollar by 2:34 p.m. in Luanda, the capital, a day after the central bank let it drop in an auction of foreign exchange, its first since saying last week it would end an almost…

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