The Markets

CAIRO (Capital Markets in Africa) – Goldman Sachs did not expect the Central Bank of Egypt’s decision to suspend the currency repatriation mechanism to make the exchange rate more volatile, despite its recent appreciation. It noted that the pound has been stable even though the majority of portfolio flows to the local bond market over the past two years have taken place outside the repatriation mechanism. It added that the depreciation pressure from the selloff…

LAGOS (Capital Markets in Africa) – Guinness Nigeria Plc sees a tough economic environment in Africa’s most populous country and a volatile naira ahead of looming presidential elections in February. The unit of U.K. drinks giant Diageo Plc is monitoring the Nigerian currency to make sure there’s no significant hit to costs, Stanley Njoroge, head of finance and strategy at Guinness Nigeria, said on an investor call in Lagos on Thursday. The brewer sees disposable income under pressure for…

NAIROBI (Capital Markets in Africa) – Kenya should issue local-currency debt outside the country to check depreciation of the shilling, rather than managing the unit, its Capital Markets Authority said. The International Monetary Fund reclassified the shilling from “floating” to “other managed arrangement” in October to reflect the currency’s limited movement due to periodic central bank interventions, saying the unit was overvalued by about 17.5 percent. “There are opportunities for Kenya to consider adopting alternative…

TUNIS (Capital Markets in Africa) – Citi Research indicated that the Tunisian dinar (TND) has been under pressure since early 2018, as the exchange rate depreciated by 20% in 2018. It attributed the weakening of the dinar to the sustained fiscal and current account deficits, as well as to the very limited progress in economic reforms, even though the country has a financial agreement with the International Monetary Fund that is linked to achieving pre-set…

LONDON (Capital Markets in Africa) – Trade Secretary Liam Fox said he’s confident the U.K. can agree a divorce deal with the European Union by the end of next month because the continent’s faltering economies will force the bloc to come to an “accommodation.” Citing Italy entering recession and weakness in the German and French economies, he said the EU 27 should be pushing for a deal.  “This is not a good time to introduce further unnecessary instability into…

NAIROBI (Capital Markets in Africa) – Benchmark South African bond yields dropped to eight-month lows in the wake of the Federal Reserve’s more dovish stance — and there may be more to come, with inflation expectations plummeting and investors pricing out any chance of a rate hike in the next two years. Yields on government securities due 2026 fell 16 basis points on Thursday to the lowest since June 1 on a closing basis. South African local-currency bonds have…

LAGOS (Capital Markets in Africa) – The rising-dollar trend that inflicted so much damage on risk appetite in 2018 is all but a thing of the past, according to Amundi Asset Management. And that can only be good for emerging markets. “The two macro threats — basically the dollar and higher interest rates coming from the U.S. — are basically diminished and they are behind us,” Pascal Blanque, group chief investment officer for Amundi, said in…