The Rwandan franc is expected to remain stable against all major currencies after recovering its stability in July, the Central Bank has said.
Official figures from the Central Bank indicate that the franc regained its strength from trading at Rwf588.58 by end of June this year to Rwf592.12 per dollar currently.
In an interview with Business Times last week, Francois Kanimba, the Central Bank Governor said that the foreign exchange market is expected to remain stable.
“My assessment of the current trend in the market is that it is quite stable. I do not want to speculate but I do not expect significant movement of the exchange rate in the remainder part of the year .There might be some slight depreciation but not very high,” he said.
Kanimba said the Central Bank had accommodated the depreciation of the franc in the second quarter of this year following a strong appreciation in the first quarter.
“We accommodated the depreciating trend in the second quarter simply by not selling a significant amount of forex to the banks,” he said.
With the recent (since July) depreciating trend of the American dollar in the international market, the Governor also pointed that there is no need for the franc to depreciate.
He observed that the franc has slightly appreciated recently as the forex market has been over liquid in the last couple of months.
“This was not the case in the second quarter in 2010 when the currency depreciated,” With demand for forex expected to increase in the next few months ahead of the festive season, the Governor said it will not have a significant impact on the forex market.
“What happens is that all the traders rush to import to replenish their stocks preparing for the festive season. There is a quite significant demand of foreign currency to the banks in October and November which pushes the exchange rate higher.”
While the exchange rates are determined by the market, the Governor said that the Central Bank may be forced to intervene if necessary to keep the market stable.
“We have the capacity to respond to such demand without creating disruption. We can sell a significant amount of money to the banks at low rate to stabilize the market,” Kanimba said.