Rwanda’s forex reserves firm up as market pressures ease up

Rwanda's economy remains robust, with the country's import cover improving from 4.1 months to 4.7 months, driven by increased exports, particularly in agricultural produce. While the franc has experienced a 1.3% depreciation month-on-month, compared to the usual 0.8%, concerns have been raised prompting the central bank to intervene. The Governor of the Central Bank highlighted that liquidity injection towards the end of the financial year and agricultural activities post-harvest season contribute to the foreign exchange market pressures experienced in August. The bank has increased its forex supply from $5 million to $7 million per week to support international trade, aiming to ease the gap in demand and supply. Kevin Karobia, a Senior Investment Research Analyst at BK Capital, noted that despite the increase in forex supply, liquidity constraints persist, and suggested a further increase in intervention to alleviate the situation. The recently released financial stability report reflects strong economic performance, with GDP growth averaging above 9% in Q1 and Q2, and inflation hovering around 5%. The health of Rwanda's financial system remains robust, with strong liquidity and acceptable non-performing loan ratios. Market performance this week showed improved turnover in fixed income but a slight decline in equities. Bralirwa saw a 5% increase in share price, reflecting investor confidence in the company. Overall, Rwanda's economy shows resilience amidst global uncertainties, with measures in place to mitigate market pressures and sustain growth.