Africa struggles with depreciating local currencies against USD
This situation hinders the already weak demand for imports as buyers mostly turn to the local market to meet their limited needs. Distributors, who had been expecting to lift their prices in order to compensate the losses caused by depreciating local currencies, have mostly failed to do so since thin demand continues to weigh down on local prices.
According to local media sources, Nigeria’s Central Bank kept its benchmark interest rate at a record high of 13% last Friday. Nigeria’s naira has been hit hard in the past year amid tumbling prices for the country’s main export, oil. 75% of the Nigerian government’s revenues come from oil exports, mainly to the US. However, these days, the US is not importing much oil from Nigeria while crude oil prices have retreated globally. According to sources, The Nigerian central bank is keeping the naira at 197 to the dollar whereas this figure used to be around 160 to the dollar.
South Africa is also experiencing a similar situation. According to media sources, the South African rand retreated to its lowest levels in a decade and a half last Friday. The rand lost more than 1.5% to hit the lowest levels seen since late 2001.
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