African Currencies Face Mixed Prospects for Next Year
TLDR
- Ebury Partners forecasts 2025 outlook for major African currencies, highlighting South Africa's rand as an outperformer and Nigeria's naira facing potential depreciation.
- Analysis by Ebury indicates mixed performance with four African currencies expected to maintain or appreciate while three may see devaluation.
- Projections based on economic fundamentals and commodity price movements, with Angolan kwanza set to weaken, Nigerian naira to depreciate, and South African rand to strengthen.
The outlook for major African currencies going into 2025 is mixed, with South Africa’s rand expected to outperform while Nigeria’s naira may face more depreciation before stabilizing, according to Ebury Partners.
Of the seven African currencies monitored by the London-based firm, four are expected to either hold their value or gain, while the other three are projected to continue losing ground. The projections are based on each country’s economic fundamentals and anticipated movements in commodity prices, according to Ebury’s head of market strategy, Matthew Ryan.
The Angolan kwanza is projected to weaken by about 8%, reaching 1,000 per dollar, while the Ghanaian cedi is expected to fall by around 16% to 19 per dollar. The Nigerian naira is anticipated to depreciate by 2.4%, hitting 1,700 per dollar, whereas the South African rand is predicted to gain 5%, reaching 16.75 per dollar. Meanwhile, the Kenyan shilling and Zambian kwacha are expected to remain stable.
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Points clés à retenir
The wide-ranging idiosyncrasies in Africa ensure a diverse outlook for the region’s currencies with macroeconomic fundamentals and commodity prices as key determinants of currency strength. While the rand is predicted to continue this year’s rally, currencies like the naira, cedi, and kwanza may experience further losses due to weaker economic fundamentals. However, currencies like the Kenyan shilling and Zambian kwacha are seen as well-positioned to hold steady amid global economic challenges.
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