Ebury Q4 FX outlook for Africa

Investment firm Ebury has released its fourth-quarter foreign exchange outlook for Africa, predicting a positive trajectory for several African currencies despite short-term challenges. In a recent interview with CNBC Africa, Matthew Ryan, Head of Market Strategy at Ebury, discussed the firm's expectations for key African currencies, including the South African rand, Kenyan shilling, Ghanaian cedi, Nigerian naira, and Angolan kwanza. Ryan highlighted the factors influencing these currencies and the outlook for the next few years. Ebury's forecast indicates that the rand is poised to outperform through 2025, buoyed by improvements in South Africa's energy sector and strong macroeconomic fundamentals. The firm also expects the Kenyan shilling and Zambian kwacha to hold steady against the US dollar, citing positive economic indicators and recent developments in each country. However, short-term losses are anticipated for the Angolan kwanza, Ghanaian cedi, and Nigerian naira due to various challenges and risks. Despite the uncertainties surrounding the US elections and potential election outcomes, Ebury remains optimistic about the overall performance of these currencies, with a cautious approach to any changes in the global economic environment. In particular, the firm sees opportunities for investors in African markets, provided they navigate the current landscape effectively. While acknowledging political uncertainties in some countries, Ebury's analysis suggests that positive economic trends and policy measures could offset these risks over the long term. The bullish outlook on the shilling in Kenya reflects improved market sentiment following key government actions and strong economic growth. Similarly, despite ongoing challenges, Ghana's efforts to address its debt issues and engage with international partners are viewed positively by Ebury. The firm's analysis of the Nigerian naira suggests a more stable outlook, supported by narrowing exchange rate differentials and adequate foreign exchange reserves. However, Ebury anticipates a modest depreciation for the Naira in the near future, driven by market conditions and external factors. In contrast, Angola's kwanza faces significant headwinds, including limited intervention options and low foreign reserves, which could lead to further depreciation. Overall, Ebury's projections emphasize the resilience and potential of African currencies in the face of global economic pressures and domestic challenges. The firm's comprehensive analysis provides valuable insights for investors and stakeholders looking to navigate the dynamic forex market in Africa.