African leaders call for expanded IMF support
African presidents from countries including the Democratic Republic of Congo and Senegal called for the IMF to triple the amount of money available to Africa under the fund’s Special Drawing Right reserves to $100bn to support countries hard hit by the coronavirus pandemic. The leaders were attending the African Economies Funding Summit in Paris this week alongside French President Emmanuel Macron, who also called for the COVAX vaccine-sharing scheme to double its vaccination target for Africa by the end of this year. With slow vaccine rates and increased infections impacting the global economic recovery, we expect to see accelerated vaccine rollout across the continent.

Nigeria sees forex supply dwindle
The Naira was little changed at 411.63 to the dollar on the NAFEX window from 411.67 at the previous week’s close, with markets experiencing a 71% slump in foreign exchange supply to $58.88m on Wednesday compared to $203.42m at the end of last week. Forex utilisation also fell to $4.98bn in the first quarter—a 65% drop compared to the opening three months of 2020. Lower forex utilisation typically means it’s harder for local businesses to access foreign currency. Meantime, the Naira remained steady on the parallel market at 482 to the dollar. We expect it to trade around 481 in the coming week, while weakening on the NAFEX window towards 420 due to the fall in FX supply.

Ghana tax changes weigh on Cedi
The Cedi declined to 5.7750 against the dollar from 5.7400 the previous week as the country continues to adjust to a range of new tax measures introduced to revive the economy and support its recovery from the coronavirus pandemic. The European Investment Bank this week agreed to provide €170m to help Ghana establish a new national development bank, a key component of the Ghana Cares ‘Obaatampa’ Project to help boost the economy following the onset of Covid-19. We expect the currency to weaken further toward 5.80 as the new taxes continue to weigh on the economy.  
     
Dollar weakness props up Rand
The Rand was steady against the dollar at 14 as a subdued greenback helped offset a larger than expected rise in consumer price inflation. April’s CPI reading of 4.4% -- the highest level in 14 months and up from 3.2% in March -- hasn’t affected the outlook for keeping key interest rates unchanged at 3.5%, with the South African Reserve Bank meeting this week on Thursday. Inflation is set to temporarily breach the 4.5% mid-point of its 3%-6% inflation target range. We anticipate the Rand will remain supported at around 14 to the dollar amid improving optimism as economies begin to reopen following Covid-related lockdowns. 

IMF hails Egypt’s economic resilience 
The Pound was stable at 15.66 following the country’s five-day Eid al-Fitr holiday. The IMF this week noted Egypt’s resilience through the pandemic as one of the world’s fastest growing economies while achieving targets set in its economic reform agenda. The country’s central bank said it would extend its support to the tourism sector by increasing provisions to cover wages, basic maintenance and operating expenses. Bias is towards appreciation given the positive momentum.

Ivorian treasuries see strong demand
The Ivory Coast this week raised 59.5bn FCFA (€89m) through the auction of treasury bonds maturing between six months and a year—attracting 92.5bn FCFA of demand. The West African country said it intends to issue 530bn FCFA of bonds in the second quarter, compared to 480bn FCFA in the first quarter. In March, the IMF said the Ivory Coast is likely to grow by around 6.5% this year, having exited its four-year IMF programme last December. 

IMF loan could lift Kenyan Shilling
The Shilling depreciated slightly against the dollar this week, trading between 106.6 and 107.9 due to higher demand for the greenback. Meantime, foreign currency reserves increased by around $20m to $7.594bn, equivalent to 4.64 months of import cover. Kenya is also expecting to receive $410m from the IMF—the second payment from a $2.34bn loan approved in April to help support the country’s economy and contain the pandemic. The IMF now forecasts the economy will expand by 6.3% this year. Given this backdrop, we expect some improvements in the Shilling over the coming week.

Dollar demand dents Ugandan Shilling
The Shilling slid against the dollar to 3545/3555 from 3530/3540 at last week’s close, pushed lower by dollar demand from exporters, including those from the energy sector. Kenyan-based private equity firm Ascent Capital this week said it has raised $100m for its second fund to invest in SMEs across East Africa, including in Uganda. We expect inflows from investors to support the Shilling this week.

Tanzania to step up Covid response
The Shilling was trading steadily at 2314/2324, the same levels as last week. A special committee set up to report on the country’s response to Covid-19 this week presented its findings to President Samia Suluhu Hassan, urging the government to ramp up public health measures to tackle the virus, as well as calling for the government to take a science-based approach to its response. We foresee a stable Shilling in the coming week supported by matched dollar supply and demand from the manufacturing and energy sectors.