The Rwanda franc rallied strongly against the British Pound and euro, as well as regional currencies between January and June this year, supported by the fact that these units were performing poorly over the period. The Rwandan franc appreciated against Kenya, Uganda and Tanzania’s currencies.
It, however, lost marginally against the Burundian franc over the reporting period. The local unit appreciated by 5.3 per cent against the British Pound and by one per cent on the euro, as the dollar strengthened against those currencies.
The currency gained 0.9 per cent against the Kenyan shilling, inched up 2.5 per cent against the Ugandan shilling and appreciated by 5.3 per cent on the Tanzanian shilling, but slipped by 0.6 per cent on the Burundian franc.
John Rwangombwa, the central bank governor, attributed the good performance against regional units to the fact that the regional currencies weakened against greenback. He was presenting the monetary policy and financial stability statement last week.
However, the franc depreciated by 1.9 per cent against the US dollar compared to 1.8 per cent recorded over the same period last year.
According to the National Bank of Rwanda (BNR), the unit was trading at Rwf670.08 per dollar as at the end of December last year, but slipped to Rwf682.54 by June 30.
Rwangombwa said the Rwanda real effective exchange rate also declined by 0.11 per cent over the period, mainly driven by a slight depreciation of the nominal value of the franc against currencies of major trading partners and an increase in prices due to high inflation in foreign countries relative to domestic inflation.
The banking sector recorded an increase of 14.8 and 6.8 per cent, respectively in forex resources and expenditures in the first half of the year compared to the same period last year despite this poor performance.
This led to a cash excess of $25.4 million (about Rwf17.4 billion) in commercial banks. Rwangombwa said this meant that the Bank reduce forex sales to commercial banks to $128 million (Rwf87.7 billion) from $158 million (Rwf108.2 billion) they had initially planned.