Rwandan currency kicks off year on bullish stance

The Rwandan franc has kicked off the year on a bullish note, gaining ground against select currencies except for the U.S dollar, raising hopes for a prosperous 2024. CNBC Africa has interviewed Kevin Karobia, Senior Investment Analyst at BK Capital, to shed light on the market's performance and prospects for the year. Karobia pointed out that while the Rwandan franc has shown strength against regional currencies, the equities market in Rwanda has started with a bearish tone. Both the Rwanda Share Index and the Oil Share Index saw declines, primarily driven by major banks like Bank of Kigali and I&M Rwanda. Investors are cautiously positioning themselves on the Bank of Kigali counter, anticipating higher dividend payouts following a strong performance in 2023. Other counters like Blarirwa are yet to see significant activity. The secondary market and bond market have also been quiet, with investors still recovering from the festive season. However, there was increased activity in treasury bills, which were oversubscribed last week. Despite the sluggish start in the equities and secondary markets, there are positive signs for the Rwandan franc, especially against the Kenyan shilling. Historically, the Kenyan shilling has been stronger than the Rwandan franc due to trade dynamics between the two countries, but this year, the franc has shown resilience. The recent consolidation in the Rwandan banking sector, highlighted by Equity Bank's merger with Koji Bank, has brought renewed investor confidence. Despite concerns about the sector being 'overbanked,' the move is seen as a positive step towards attracting foreign investments and strengthening the banking sector. BK Capital currently holds a significant market share, but with the merger, Equity Bank Rwanda is expected to increase its market share, fostering more competition and driving growth in the financial sector.