Franc loses ground against US dollar

The Rwandan Franc has continued to lose more ground against the US dollar and other major currencies frustrating the central bank’s efforts to stem its downward trend.On Saturday, the local unit was trading at an average of 665/672 a drop from 645/658 last week.The franc has been losing ground for the past weeks, closing at an average of 647.9/670 at the end of last month.A number of forex dealers have cited low supply of US dollars on the market as the main reason for decline of the local unit.“Rwanda depends on export receipts for supply of dollars, but the demand from importers for dollars is much higher than the supply,” said Dieudonne Bakunda, a treasury dealer at I&M Bank Rwanda.Bakunda said the previous central bank’s intervention couldn’t satisfy the demand. He predicted the franc would continue the downward movement against the US dollar and other major currencies in days ahead.The previous Monday, I&M Bank Rwanda was exchanging the dollar at 640/678 compared to 648/683 yesterday. “If someone was sending Rwf10m last week at Rwf670, he or she can’t transfer that same amount this week because the Rwf5 difference would mean that he’s losing quite a significant amount of money,” he explained.The central bank quoted the unit at 654.5/660.7 yesterday compared to 649.1/655.2 on August 26. The euro traded at 877/896 yesterday while the pound quoted at 1,038/1,058 up compared to last Tuesday’s Rwf 861/878 and Rwf 1028/1048 respectively.On month to month basis, the Euro closed at Rwf 861/878 at the end of last month while the pound closed at Rwf 998/1017 up from Rwf 851/867 and Rwf 982/1001 respectively compared to the previous month.Jane Nyamwiza of Prime Forex Bureau in Remera, attributed the decline of the franc to reduced supply of the greenback from the National Bank of Rwanda.Nyamwizaexplained that since the central bank had reduced on the amount of dollars it sells to the commercial banks some time back, only a few of the 100 forex bureau operators get $50,000 weekly quota.Although the foreign exchange resources in the banking system increased by 2.6 per cent in the first half of this year compared to the same period of last year, it has not been sufficient to meet the high demand for imports.Also, the central bank intervened in the foreign exchange market, selling $118.78m to commercial banks over the period to support the local currency.