Interest rates, currency risks top African central banks agenda

African central banks are facing tough decisions as they navigate interest rates and currency risks amidst economic challenges across the continent. Analysts predict that more African central banks may opt to hold rates or take a less hawkish stance as they evaluate risks to their currencies and high debt profiles. Recently, Angola's Central Bank decided to maintain its main interest rate at 17 per cent, signaling a cautious approach to the country's economic landscape. In contrast, Ghana and Nigeria are gearing up for upcoming announcements by their Monetary Policy Committees, with discussions revolving around potential rate hikes to address inflationary pressures and economic slowdown. Rhode Luemba, Head of Flow sales, Global Markets at Standard Bank Group, weighed in on the current situation in African economies, particularly in Ghana, Nigeria, and Angola. Luemba highlighted the challenges faced by these countries, such as fluctuating currency values and production dynamics in the oil sector. In terms of currency performance, Luemba pointed out the struggles faced by the Kwanzaa in Angola and the Naira in Nigeria. Both currencies have seen depreciations against the US dollar, leading to widening spreads between official exchange rates and parallel markets. However, Luemba expressed optimism about a potential reduction in the exchange rate gap, especially with the recent surge in oil prices above $90 per barrel that could generate additional revenue for these oil-exporting nations. Discussing production volumes in the oil sector, Luemba highlighted a slight decline in oil production in Angola. Despite this decrease, production levels are still within the government's expected range of 1.12 million barrels per day. Luemba stressed the importance of sustaining or increasing oil production to capitalize on current high oil prices and boost economic growth. Shifting focus to Ghana, Luemba addressed the country's engagement with the International Monetary Fund (IMF) and its efforts to stabilize the economy through debt restructuring. With the IMF set to release a remaining tranche of $600 million contingent on successful reforms, Ghana aims to restore trust and credibility following a previous default. Luemba commended Ghana's progress in debt restructuring, citing high participation levels in recent programs and government initiatives to address outstanding obligations. Looking ahead, Luemba expressed optimism about the economic outlook for Ghana, expecting a rebound in GDP growth by the end of the year. He attributed this optimism to the government's commitment to implementing reform measures and adhering to IMF guidelines, which signal a positive trajectory for Ghana's economic recovery. As African central banks continue to grapple with complex economic challenges, the decisions made regarding interest rates, currency stability, and debt management will play a crucial role in shaping the region's financial landscape. With a mix of cautious approaches and proactive measures, these central banks aim to navigate uncertainties and drive sustainable economic growth in the face of global market dynamics.