African Currencies Mostly Soft as Oil Posts Steepest Weekly Drop Since 2020
African currencies showed no clear gain from this week’s sharp fall in oil prices, with the South African rand and Botswana pula slightly weaker against the dollar and Angola’s kwanza unchanged, according to market data.
The naira steadied against the US dollar, closing the week at N1346.7945 at the Nigerian Foreign Exchange Market (NFEM) trading window, up from N1,346.2565 at the start of the week.
Brent crude was on track for a 16% weekly decline, its steepest since the start of the Covid-19 pandemic, after election losses for US President Donald Trump’s Republican Party raised hopes of a de-escalation in the US-Israeli war on Iran.
Other measures pushed the drop closer to 13%. Brent settled at $98.32 a barrel on Friday. Brent briefly topped $126 in late April, so prices remain far above pre-war levels.
Tanker attacks near the Strait of Hormuz have continued to support prices. The oil slide also came against a backdrop of a technology stock sell-off.
Rand: USD/ZAR rose 0.33% to 16.53, meaning a slightly weaker rand. That puts it in the middle of the 16.3–16.7 range of recent months. The rand was on track for a nearly 8% decline in March as the Iran war pushed investors toward the dollar.
The South African Reserve Bank held rates at 6.75% in March but said the war was clouding its inflation outlook. Lower oil prices could ease that pressure for an oil importer such as South Africa, though the rand’s latest move suggests global risk appetite is outweighing that benefit.
Kwanza: USD/AOA was unchanged at 912.80. Oil-dependent Angola manages its currency, so a flat quote may reflect a reference rate rather than free trading. Sustained lower crude prices would add pressure on the kwanza.
Burundian franc: USD/BIF edged up 0.01% to 2,990, an official rate that analysts say understates the currency’s weakness. The IMF said the official rate remained significantly overvalued, with a gap of around 100% to the parallel market at the end of April, even after stronger coffee and gold earnings.
Pula: USD/BWP rose 0.67% to 13.42. Botswana runs a crawling peg, with the pula managed against a basket that includes the South African rand, so it tends to follow the rand. Its larger move this week may reflect the peg’s mechanics or a thin quote.
Analysts caution that the managed currencies’ small moves reflect policy as much as market sentiment. Foreign Reserves Top $3.4trn as China Increases Gold Buying
