The Rwanda franc has shed about Rwf8 or 1.08 per cent over the past five weeks of this year, with the central bank quoting the unit at 748.9/763.9 (selling and buying) yesterday compared to 740/754 in the first week of January. 

Commercial banks and forex bureaus quoted the unit at an average of 770/780 yesterday, unchanged from Friday’s close, but this was a decline from 760/770 at the beginning of January.

The National Bank of Rwanda (BNR) quoted the euro at Rwf809/825 at the beginning of January, but traded at a high of 839/856 against the local currency by the end of last week.

However, the Pound Sterling has been range-bound over the period. It was quoted at 1096/1118 at the beginning of last month, and was marginally up at 1092/1114 by yesterday’s close, according to forex rates quoted by BNR. Commercial banks quoted it at an average of 1100/1145 yesterday.

In what the central bank called a market driven exchange rate, the franc depreciated by 7.1 per cent against the US dollar last year, the biggest drop in five years since 2010. However, it appreciated against the euro and most international and regional currencies, the regulator said.

According to analysts, the continued poor run of the local currency against the greenback and other international currencies is more pronounced in the retail market.

The Rwanda franc hit an all-time low forcing some forex bureaus to trade the dollar at Rwf800 last July, a situation the central bank blamed on speculators, before it cracked the whip on suspected dealers and bureaus to stabilise the forex market. It later outlawed the then growing practice by local businesses to quote prices in US dollars.

"There has been an inflow of dollars in the recent weeks, but the demand has been high and outstripped the supply of US dollars on the market,” said a forex dealer at Trust Forex Bureau in Nyabugogo.

Robert Karyeija, a forex dealer at Gatuna border post, was however optimistic that despite the drop, the franc will soon gain more ground, arguing that it is characteristic of this period of the year.

"The year has just begun, at this point business is usually slow but in the coming months it will gain ground because of an increase in economic activities and more dollar inflows,” he said.

In a broader basket, it is worth noting the other regional currencies are struggling against all the major international currencies.

The Uganda shilling that had gained ground towards the end of last year could not maintain grip against the greenback and last week was quoted at an average of 3300/3500, a decline of about Ugsh200.

However, the Kenya shilling that closed the year at an average of Ksh102 after losing 11.9 per cent has remained stable against the dollar. It was trading at 102/102.3 at the beginning of January and 102/102.2 last week, according to the Kenya Central Bank statistics. Most experts nevertheless predict that regional currencies could take a while before making gains against international currencies.

Tanzania is expected to debut a eurobond anticipated to raise $700 million, but the local currency is still under the pressure from the US dollar after last year’s 25.1 per cent loss against the dollar, besides the country’s widening current account deficit.

business@newtimes.co.rw