West Africa’s single currency delayed… again
The planned launch of the Eco—the common currency for members of the Economic Community of West African States (ECOWAS)—has been delayed for six years, the latest in a series of setbacks for the new currency, which was originally slated to be introduced this year. Members of West Africa’s 15-nation bloc on Saturday agreed to suspend implementation of the 2020-2021 convergence pact due to the impact of the coronavirus pandemic, setting out a new convergence timetable that will run from 2022 until 2026, with the Eco due to be launched in 2027.

Crude declines add to Naira pressures
The Naira slid to a low of 503 against the dollar on the parallel market from 500 at Friday’s close as ongoing liquidity pressures weigh on the currency. The outlook was further soured by the drop in crude oil prices to $74.2 per barrel from $76 a week earlier with rising Covid-19 cases in parts of Europe and Asia leading to tighter restrictions, crimping oil demand. The World Bank continues to push for greater alignment of Nigeria’s multiple exchange rates before it will release a much-needed $1.5bn support loan. We expect sustained pressure on the Naira in the coming days as the liquidity scarcity persists.

Ghana hit by liquidity strains
The Cedi edged lower to 5.85 against the dollar compared to 5.83 at the end of last week amid tighter market liquidity. The Cedi has now depreciated 18% since February. Meantime, Ghana is one of a number of African countries set to benefit from $33bn in financing from the International Monetary Fund once the IMF's $650bn special drawing rights programme has been approved, likely by the end of August. The funds are being made available to boost those countries’ reserves and liquidity without adding to their debt burden, the IMF’s managing director Kristalina Georgieva said last week. We project sustained pressure on the Cedi in the coming days as demand for dollars outweighs supply.

Covid woes weigh on Rand
The Rand has continued to weaken against the dollar, trading at 14.33 compared to 14.15 at Friday’s close as an upsurge in Covid-19 cases forces the government to tighten restrictions, including a 14-day ban on all gatherings, alcohol sales and restaurant dining. South Africa’s third wave is expected to have a negative impact on its already strained economy, with the hospitality, aviation and liquor sectors likely to be hardest hit—as was the case during previous periods of restrictions. We project further stress for the Rand in the coming days.

IMF gives thumbs up on Egypt reforms
The Pound depreciated slightly against the dollar this week, trading between 15.65 and 15.72. The IMF last week completed its second and final review of Egypt’s economic reform programme, unlocking about $1.7bn in additional funds. The IMF said Egypt’s economy is expected to grow 2.8% in the 2020/21 fiscal year and rebound to 5.2% in 2021/22, subject to the ongoing impact of the coronavirus pandemic. We expect to see slight improvements to the Pound in the coming week buoyed by investors' support.

IMF loan pumps up Kenya’s reserves
The Shilling came under pressure this week, trading at 107.85/107.95 due to month end dollar demand from importers in the energy and manufacturing sectors. Kenya’s foreign exchange reserves swelled to their highest level this year after the IMF disbursed the second part of a $2.34bn loan last week. Usable reserves stood at $8.1bn, adequate for 4.96 months of import cover—up from just under $7.5bn last week. The IMF loan is intended to provide budgetary support for the remainder of the 2020/21 fiscal year, which ended on Wednesday, and the coming 2021/22 financial year. The World Bank on Monday also approved $130m in additional funding for Kenya’s Covid-19 response to boost access to vaccines. Against that backdrop, we expect to see some gains for the Shilling over the coming seven days.

Uganda secures IMF funding as lockdown continues
The Shilling declined against the dollar to 3555/3565 from 3550/3560 earlier this week amid increased dollar demand from corporates and the interbank market. Uganda is currently in a 42-day lockdown, with restrictions on non-essential business operations reducing demand for goods and services, further denting sentiment for the Shilling. The IMF on Monday approved a roughly $1bn-equivalent loan under a 36-month extended credit facility, with $258m made available for immediate disbursement to finance budget spending. We expect that IMF support will keep the Shilling steady.

Tanzania finally releases Covid data
The Shilling was steady at 2314/2324 this week, with Tanzania reporting its Covid-19 statistics publicly on Monday for the first time since May last year. President Samia Suluhu Hassan told reporters that the country had recorded 100 new cases of the virus—70 of those critical. That came against a backdrop of the IMF withholding a $571m loan for Tanzania until it started publishing data on Covid infections. We expect to see further support for the Shilling in the coming days from investor inflows secured in last week’s oversubscribed treasury bills auction, which will balance dollar demand from corporates.