The African Development Bank (AfDB) forecasts that nearly half of African currencies will depreciate against the US dollar in 2025, due to geopolitical tensions and domestic economic challenges, according to its African Economic Outlook report.
As reported by Bloomberg on Wednesday (28), the Abidjan-based development institution expects that the currencies of 21 African countries will lose value relative to the dollar, while 25 may appreciate.
“Several countries – Egypt, Ethiopia, Ghana, Libya, Nigeria, Rwanda, Zambia, and Zimbabwe – are expected to experience currency depreciations of 6% or more between 2025 and 2026,” the bank states, citing volatility from rising global uncertainty, and noting that “countries like Kenya, Morocco, and those in the CFA franc zone (former French colonies in Africa) could see an appreciation* of more than 3%.”
The global trade war triggered by former US President Donald Trump rattled financial markets and increased investor risk aversion, affecting emerging markets and putting pressure on some currencies. This has also raised borrowing costs by restricting access to dollar-denominated credit in international capital markets, thereby tightening the supply of US dollars.
In 2024:
- The Ethiopian birr depreciated 5.7%,
- The Nigerian naira lost 2.8%,
- And the Rwandan franc fell by 2.5%.
Conversely:
- Ghana’s cedi appreciated 43%, driven by the surging price of gold, which boosted the economy of Africa’s top gold exporter.
- South Africa’s rand rose 5% after the country’s governing coalition overcame a budgetary deadlock.
“Although exchange rate pressures have largely been driven by global factors, internal challenges such as misaligned exchange rate regimes, monetization of fiscal deficits, political instability, and low productivity have also played a significant role,” added the AfDB.
Source: Diário Económico
