Harare – The first quarter of 2021 was not good to currencies in several SADC countries, as the US dollar strengthened and economic recovery from the impact of the COVID-19 was not as rapid as anticipated.
The South African rand weakened in March 2021 against most major currencies.
Data from Stats SA revealed that the unweighted average change in the value of the rand amounted to -0.3 percent. Month-on-month, the rand depreciated by 1.3 percent against the US dollar and by 1.6 percent against the British pound, but was stable against the euro and 1.6 percent stronger against the Japanese yen. The rand was 2.1 percent stronger against the Swiss franc, but lost 0.6 percent against the Chinese yuan and 1.1 percent against the Australian dollar.
The Botswana pula depreciated by 0.9 percent against the rand early in the year, but appreciated by 0.3 percent against IMF Special Drawing Rights (SDR).
The pula recorded a mixed performance against the SDR constituent currencies. It appreciated by 2.1 percent against the Japanese yen and 0.5 percent against both the US dollar and the Chinese yuan, while it depreciated against other currencies.
According to a joint press statement by the Bank of Namibia and the Namibian Financial Institutions Supervisory Authority, the Namibian dollar depreciated against all major trading currencies.
However, the country’s international reserves grew even as Namibia’s and South Africa’s – sovereign credit outlooks were revised downwards by all major credit rating agencies.
The depreciation of the Namibian dollar against major currencies was attributed to investors’ risk aversion towards emerging markets and developing economies during the COVID-19 pandemic.
“At the time of releasing the April 2021 Financial Sustainability Report, the risk of sharp NAD/ZAR depreciation had already materialised, with some of that depreciation reversed during the latter part of 2020 as risk aversion softened. Going forward, the risk of renewed sharp NAD/ZAR depreciation is projected to be moderate in line with market forecasts and forward cover rates.
“Namibia’s international reserves increased mostly due to higher Southern Africa Customs Union (SACU) receipts, a weaker currency as well as a lower import bill. The international reserves remain at a sufficient level to safeguard the peg of the NAD to the South African Rand (ZAR) and meet the country’s international financial obligations,” Namibian authorities said this week.
The Zambian kwacha has been falling against the dollar, and analysts believe the trend will continue until the government sorts out its external debt issues.
Foreign exchange reserves continue to slide and the weakening kwacha has seen inflation surpass 20 percent.
Tanzania’s shilling is expected to hold steady in the coming quarter of the year as agricultural exports continue to grow.