THE Rwandan franc depreciated by 4 percent against the US dollar between December 2009 and December 2010, boosting the growth in the country’s export sector, the central bank has said.
According to the central bank’s monetary and financial stability statement, the franc also depreciated by 1 percent against the Pounds Sterling (GBP), while sensibly appreciated against the EUR by 5 percent.
“This is not very significant, our real exchange rate was stable, this is a policy principle we would want to maintain to avoid further appreciation of the Rwandan franc which can affect the external performance of the country,” François Kanimba, the central bank Governor said.
Against regional currencies, the franc depreciated by 2 percent, 6 percent and 14 percent against the Kenyan, Tanzanian and Ugandan shillings respectively. But it appreciated by 5 percent against Burundi franc.
The central bank says that trend is a result of a deliberate policy to offset loses in Rwanda’s external sector competitiveness resulting from the strong appreciation of the Rwandan franc between 2004 and 2009.
According to the statement, compared to 2009, domestic foreign exchange market has been significantly boosted by a substantial increase both in resources and expenditures.
“In this regard, on account of economic recovery process in 2010, the private sector’s demand for forex increased by 14.4 percent for imports of goods and by 17.9 percent for transfers,” the statement reads, adding that to meet its external payment commitments, the Government has also significantly increased its spending in forex by 45.4 percent.
With regard to the external trade, Rwanda’s exports increased by 27 percent to US$298.3 million in 2010 from US$234.9 million in 2009.